Finding a Profitable Balance between East and

West: Why Ukraine Is Choosing Not To Choose

Ukrainian domestic actors and their foreign policy

preferences

Nik

Master’s Thesis Political Science, Specialization International Relations

Research project: EU-Enlargement & Relations with the Neighborhood

Name: Nikki Ikani

Student number: 5969751

Date: 30 June 2010

Supervisor: Dr. Annette Freyberg-Inan

Second reader: Prof. dr. A.W.M. Gerrits

University of Amsterdam

A liberal intergovernmentalist approach

2

The two pictures on the front page show Viktor Yanukovych posing with Herman van Rompuy (photo by

EPA/BGNES), president of the European Council on the left, and Dmitri Medvedev, president of the

Russian Federation, on the right (photo by Xinhua/Lu Jinbo).

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Abstract

This research took Ukraine‘s balancing act between the EU and Russia as its point of departure. It has

tried to explain why Ukrainian foreign policy and its subsequent positioning between the Eastern and

Western vector is the way it is. This knowledge has been acquired by using the theoretical framework of

the liberal intergovernmentalist approach, as put forward by Andrew Moravcsik (1991, 1993). This study

shows that the Ukrainian domestic bargaining process shows three important features: The centrality of

the presidency; the dominance of informal politics in the Ukrainian political system; and the importance of

pragmatic considerations in the domestic bargaining process.

The second section of this research consists of a policy analysis of the European Neighborhood Policy

(ENP), as it looks at the extent to which the ENP towards Ukraine is correctly adjusted to the country

and the specific policy making process. I have concluded that while the ENP towards Ukraine may have

had some success in terms of providing a transitional framework towards Ukraine with guidelines for

domestic policy-making, it still bears four flaws concerning (1) its failure to mobilize pro-European

politicians and to generate political will to actually pursue reforms, (2) its insufficient attention for

informal power structures, (3) insufficient attention for Ukraine‘s complicated relationship with Russia, as

well as (4) the absence of clear incentives and an unfortunate disharmony between long-term rewards and

short-term costs.

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TABLE OF CONTENTS

ABSTRACT 3

ACKNOWLEDGEMENTS 7

1. INTRODUCTION 8

1.1. POLITICS IN UKRAINE 11

1.2. THEORETICAL FRAMEWORK 13

1.2.1. LIBERAL INTERGOVERNMENTALISM (LI) 13

1.2.2. MODES OF EXTERNAL GOVERNANCE 14

1.3. RESEARCH QUESTION AND SUB-QUESTIONS 14

1.4. SIGNIFICANCE 15

1.4.1. SCIENTIFIC RELEVANCE 15

1.4.2. ECONOMIC AND POLITICAL RELEVANCE 16

1.5. METHODOLOGY 17

1.5.1. APPLYING THE LI APPROACH TO UKRAINE 18

1.5.2. SECONDARY LITERATURE 18

1.5.3. ANALYZING THE ENP 19

1.5.4. RELIABILITY 19

1.5.5. VALIDITY 20

1.6. OVERVIEW 20

2. HISTORICAL FRAMEWORK: EU-UKRAINE RELATIONS SINCE INDEPENDENCE 22

2.1. INDEPENDENCE 22

2.2. THE EUROPEAN CHOICE 22

2.3. DECLARATION WITHOUT INTEGRATION 23

2.4. DOMESTIC TROUBLE AND THE RENEWED RUSSIAN INTEREST 24

2.5. THE ORANGE REVOLUTION 25

2.6. UKRAINIAN POLITICS AFTER THE ORANGE REVOLUTION 27

2.7. THE EUROPEAN NEIGHBORHOOD POLICY: UKRAINE 27

2.7.1. THE EUROPEAN NEIGHBORHOOD POLICY 28

2.7.2. THE ENP TOWARDS UKRAINE 29

2.7.3. THE LIMITATIONS OF THE ENP TOWARDS UKRAINE 30

2.8. UKRAINE’S POSITIONING: DOES IT HAVE TO CHOOSE? 31

2.9. CONCLUSION 32

3. THEORETICAL FRAMEWORK 34

3.1. LIBERAL INTERGOVERNMENTALISM: A RESPONSE TO NEOFUNCTIONALISM 34

3.2. LIBERAL INTERGOVERNMENTALISM 35

3.2.1. RATIONAL STATE BEHAVIOR 35

3.2.2. NATIONAL PREFERENCE FORMATION 36

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3.2.3. INTERGOVERNMENTALIST ANALYSIS OF INTERSTATE NEGOTIATIONS AND INTERACTIONS 38

3.3. CRITIQUE OF LIBERAL INTERGOVERNMENTALISM 38

3.4. APPLYING LIBERAL INTERGOVERNMENTALISM TO THE CASE 39

3.5. MODES OF EXTERNAL GOVERNANCE 43

3.6. APPLYING THE EXTERNAL GOVERNANCE MODES TO THE CASE 44

3.6.1. HIERARCHICAL GOVERNANCE 44

3.6.2. NETWORK GOVERNANCE 44

3.6.3. MARKET GOVERNANCE 45

3.6.4. IDENTIFYING MODE OF GOVERNANCE 45

3.7. CONCLUSION 48

4. DOMESTIC ACTORS AND THEIR FOREIGN POLICY PREFERENCES 50

4.1. PRESIDENCY AND PRESIDENTIAL ADMINISTRATION 54

4.2. PRIME MINISTER 56

4.3. THE MINISTRIES AND THE BUREAUCRACY 57

4.4. NATIONAL SECURITY AND DEFENSE COUNCIL (NSDC) 58

4.5. CONSTITUTIONAL COURT 59

4.6. VERKHOVNA RADA (PARLIAMENT) 60

4.6.1. THE PARTY OF REGIONS 61

4.6.2. BLOCK OF YULIA TYMOSHENKO 62

4.6.3. BLOCK OUR UKRAINE- PEOPLE’S SELF-DEFENCE 64

4.6.4. COMMUNIST PARTY OF UKRAINE 65

4.6.5. BLOCK OF LYTVYN 65

4.7. INFORMAL STRUCTURES: THE ‘PARTY OF POWER’ 66

4.8. OLIGARCHIC GROUPS 66

4.8.1. THE DONETSK CLAN – SYSTEM CAPITAL MANAGEMENT 68

4.8.2. DNEPROPETROVSK CLAN 69

4.8.3. THE KIEV CLAN 71

4.8.4. THE INDUSTRIAL UNION OF DONBASS 72

4.8.5. FOREIGN POLICY PREFERENCES OF THE CLANS 73

4.9. CIVIL SOCIETY 74

4.10. CONCLUSION 75

5. THE DOMESTIC BARGAINING PROCESS AND ITS CONSEQUENCES FOR UKRAINE’S

POSITIONING BETWEEN EAST AND WEST 78

5.1. CENTERS OF POWER 79

5.1.1. MULTI-VECTORISM AND AMBIVALENCE AS A CHOICE OF THE OLIGARCHY 80

5.2. PERIPHERIES OF POWER 84

5.3. UKRAINIAN FOREIGN POLICY AND ITS POSITIONING BETWEEN EAST AND WEST 86

5.4. CONCLUSION 87

6. TO WHAT EXTENT DOES THE ENP REFLECT THE ABOVE INSIGHTS? 89

6.1. IDENTIFYING THE MODE OF GOVERNANCE OF THE ENP 89

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6.1.1. ACTOR CONSTELLATION 90

6.1.2. DEGREE OF INSTITUTIONALIZATION 92

6.1.3. MECHANISM OF RULE EXPANSION 94

6.1.4. POWER RELATIONS AND INTERDEPENDENCE 96

6.1.5. MODE OF GOVERNANCE IN THE ENP TOWARDS UKRAINE 100

6.2. EFFECTIVENESS OF THE ENP’S MODE OF GOVERNANCE 102

6.3. CONCLUSION 106

7. CONCLUSION 109

7.1. EMPIRICAL FINDINGS: UKRAINE’S DOMESTIC BARGAINING PROCESS AND FOREIGN POLICY

PREFERENCES 109

7.2. POLICY ANALYSIS AND POLICY RECOMMENDATIONS 113

7.3. THEORETICAL FINDINGS 115

8. BIBLIOGRAPHY 118

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Acknowledgements

I would like to thank those who have helped me during the process of writing this thesis. First and

foremost I would like to thank dr. Annette Freyberg-Inan, whose extensive feedback and help has been of

the greatest value for me during this research. Special thanks go, furthermore, to two experts on Ukraine

who were so kind to read and comment on my work, dr. Max Bader and Mihai Varga MA. Your

knowledge on Ukraine has contributed greatly to this thesis.

Finally, I would like to thank my fellow students in the research group as well as my friends and family for

their support and feedback.

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1. Introduction

The days of the Kievan-Rus empire are long gone, but the nation of Ukraine was born on parts of the

Kievan-Rus territory. In the 19th century, Ukraine had to face the East, as it became part of the Russian

empire. After becoming an independent state in 1990, Ukraine again turned its focus towards the West, as

leaders of Ukraine, such as presidents Kravchuk and Kuchma, often articulated Ukraine‘s desire to

become an EU member. Despite the fact that the country was and still is very much divided over the

preferred course of Ukraine‘s foreign policy, the Ukrainian rhetoric was one of continuous flirts with the

EU in the early 1990s.

This research will analyze how the key domestic actors in Ukraine influence Ukrainian foreign policy. This

is done in order to improve our understanding of Ukraine‘s positioning between East and West, which, as

the history of the country shows, seems to be a continuous and precarious balancing act.

Motivated by strategic objectives to do with the size and geopolitical significance of Ukraine, the EU

opened a political dialogue with Ukraine through the signing of the Partnership and Cooperation

Agreement in June 1994, in which issues such as trade, the movement of capital and the Common Foreign

and Security Policy were discussed.1 2 This political dialogue was tied to conditionalities with regard to

1 Full references, http addresses, and access dates for all online sources are found in the Bibliography.

Kiev, 1048. It had been a long day when the entourage of the daughter of Yaroslav The Wise, the Kievan-Rus

leader, was suddenly visited by a French envoy. King Henry the First had sent his servants all the way to Kiev to

ask Anna, the daughter of Yaroslav, to marry him. It was a wise move of the King: rumors had reached the British

island on the exceptional beauty of the Ukrainian heiress. It was, however, not for purely romantic reasons that the

King rummaged around the courts of Europe for a new wife. France had been caught in internal troubles, with the

monarch fighting separatist movements led by powerful counts and barons. An alliance with the powerful and

recognized Kievan-Rus Empire could bring the King some peace of mind.

The response of Yaroslav had been clear: he would be happy if his daughter was to be the new queen of France.

Yaroslav, who had gained his illustrious nickname for a reason, was equally caught in strife with the Byzantine and

Holy Roman Empire. A powerful ally in the West could make for a useful alliance.

As Anne and Henry were married at the church of Reims on May 19, 1051, the first alliance between Kiev and

the European mainland had been formed.

(‗Anna, the Daughter of Yaroslav: the Mysteries of Destiny‘, 1999)

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political and economic reform, but nevertheless Ukraine‘s government felt confident that EU membership

would soon be an actual prospect. It came as a surprise for Ukraine, therefore, that instead of a warm

recognition of Ukraine‘s membership aspirations at the Helsinki European Council in December 1999, the

EU merely ―acknowledged‖ Ukraine‘s European choice, while adopting a Common Strategy on the

country. This Common Strategy would foster EU-Ukraine relations, but kept Ukraine unwillingly at the

gates of Europe with the status of an outsider (Wolczuk, 2004, pp. 5-6). This was a disappointment for the

Ukrainian elite in favor of European Union membership.

This sense of belonging to Europe, however, has not been met by the Ukrainians with actual institutional

manifestations of contemporary ‗Europeanness‘ (Wolczuk, 2004, p. 7). Over the years it became clear that

economic and political reforms were lagging behind European hopes for the country, and Ukraine became

known for its inconsistent governmental policies, its unreformed economy and opaque rules (Turczyński,

2005, pp. 52-53). The incomplete democratic reforms were the main stumbling block for solid EU

Ukraine relations, and the EU tempered its enthusiasm towards Ukraine. This was in part caused by what

Kubicek (2005, p. 269) calls the ‗substantial disconnect between the rhetoric of Ukraine‘s ―European

choice‖ and the authoritarian trends in the country‘. The response of the EU to this lack of

implementation of policy changes in the late 1990s was to keep Ukraine at bay. During this time, also,

anti-European sentiment was on the rise in Ukraine. The antipathy against the West and the growing pro-

Russian sentiment were manifested in Ukrainian responses to the Kosovo war in 1999 (Turczyński, 2005,

p. 3).3 More and more it seemed that the European dream was limited only to President Kuchma and his

selective elite, and that the actual implementation of EU-guided policy changes was not to take place.

It was around the same time (2000) that Vladimir Putin became president of Russia. This had implications

both for the EU‘s foreign policy and for Ukraine. The EU‘s stance towards Russia changed, as Putin

offered safer energy supplies than the Middle East. For Ukraine, the attractiveness of Russia resided in the

prospects of investments that it embodied. Meager European investments in Ukraine opened the doors

for large-scale Russian investments, augmenting Russian influence in Ukraine. The fact that Ukraine had a

severe energy debt to Russia tightened Russia‘s grip on the country (Turczyński, 2005, p. 55). This was

being amplified by the political tumult in Ukraine around the year 2000. Ukrainian oligarchs managed to

overthrow pro-European prime minister Viktor Yushchenko on April 26, 2001, and Ukrainian democracy

fell into decay. Yushchenko, who acquired his position as prime minister in part as a result of European

lobbying, was not supported by the EU during this troublesome period. It was during this time of

2 A Partnership and Cooperation Agreement (PCA) has been set up with nine countries in Eastern Europe in order to provide a framework for political dialogue between the EU and these countries, to support these countries in their transition towards democratic countries with well-functioning market economies. The PCAs also provide room for cooperation with regard to legislative, economic, social, financial, scientific, civil, technological and cultural fields (European Commission, Partnership and Cooperation Agreements, online). 3 Ukrainian public opinion condemned the NATO bombings in Yugoslavia. 31 percent of the Ukrainians were against the NATO bombing, and only 11 percent blamed Slobodan Milosevic for the conflict. The Parliament, dominated by Communists, called for an immediate halt to the bombings, while the Kuchma administration had a pro-Western opinion (Buckley & Cummings, 2001, p. 181).

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domestic chaos that Putin visited Ukraine for the third time in a short period in February 2001, when he

was able to enforce extensive economic and military agreements with the country, tying Ukraine‘s fortune

more closely to that of Russia (Turczyński, 2005, p. 55).

Then came the elections of 2004 and the following Orange Revolution. The elections underlined the

renewed Russian interest in Ukraine under the reign of Putin, who visited Kiev on multiple occasions

during the Ukrainian election period, expressing his support for Viktor Yanukovych, the conservative

Ukrainian candidate known to favor the Russian vector in Ukrainian foreign policy. The elections took an

outright troublesome course. The first round of the elections was said to have been conducted in an

irregular manner, and the EU responded that it regretted the fact that this first round did not meet

international standards for democratic elections (Council of the European Union, 2004). After the second

round of the elections, Yanukovych was announced as the winner, despite the fact that around three

million ballots were argued to be falsified. This triggered enormous tensions in Ukraine, leading to mass

demonstrations by supporters of Viktor Yushchenko on the Independence Square in Kiev. These

demonstrations became known as the ‗Orange Revolution‘, named after the color of Yushchenko‘s party.

It was only after a difficult period of negotiations that a law was amended in order to make a re-run of the

second round of the elections possible. This re-run was won by the proclaimed reformer, Viktor

Yushchenko. The embattled elections and the following Orange Revolution showed how troubled the

Ukrainian democracy had become.

Yushchenko promised radical economic and political reforms, stating as early as in his augural address that

Ukraine‘s place was in the European Union (Turczyński, 2005, p. 73). The EU welcomed the European

choice that Ukraine had made. After having achieved the goal of regime overthrow, however, the Orange

coalition fell apart, and Ukraine fell back to old habits of nepotism and corruption. The EU made it clear

that this course would not move it closer to the EU. Ukraine was denied Associate Membership in Yalta

in 2003. No prospect or timeline of membership was offered this time. And while the Enlargement round

of 2004 meant a final blow to Ukrainian short term membership aspirations, around the same time, the

ENP action plan was agreed upon on December 9, 2004, pushing Ukraine back to the position of mere

neighbor (Turczyński, 2005, pp. 49-75). The sealing of the border with Poland as a result of Poland‘s

accession came as a big disappointment to Ukraine‘s leaders. Prime Minister Yanukovych even stated that

Ukraine had been humiliated by this course chosen by the EU. Andrei Zagorski (2004, p. 85) states that

EU-Ukraine relations are ‗an explicit example of a misfortune relationship between the two sides which

pursue different agendas since the Ukrainian aspirations with regard to the EU are much more ambitious

than the EU is prepared to accept‘.

The trend away from the possibility of Ukrainian EU membership is paralleled by Ukraine‘s renewed

focus on Russia. Ukraine fortified its relations with Russia with multiple economic agreements

(Turczyński, 2005, p. 58). Moreover, Ukraine tightened its ties with the Commonwealth of Independent

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States.4 On April 5, 2010, the Ukrainian president Yanukovych directly addressed the new trend of the

country, abolishing the commission occupied with NATO membership and stating that Ukraine should

focus more on Russia than on the West (‗Ukraine's Yanukovich scraps NATO body‘, 2010).

Nevertheless, while the recent ‗Russian trend‘ in Ukraine is being witnessed by many authors, the exact

roots of this trend remain vague. The reason why this research wants to assess Ukraine‘s positioning

between East and West by focusing mainly on the domestic actors of Ukraine and their bargaining

process, is that Ukraine‘s history shows that its foreign policy orientation has always been determined to a

large extent by a continuous domestic struggle, wherein multiple actors with wide-ranging interests

compete for influence on foreign policy. While domestic politics heavily influence a country‘s foreign

policy-making process in most countries, in Ukraine one could argue that the domestic political process is

a particularly complex and important factor for understanding the country‘s foreign policy-making.

Ukraine‘s population is divided along religious, cultural, ethno-linguistic and political lines, while political

elites in the country are divided in their views on the Ukrainian identity and its subsequent foreign policy

orientation (Miller, 2003, pp. 383-384). For example, many of the western-Ukrainian businessmen favor

stronger ties with the EU, while the Russian financial-industrial conglomerates that penetrate the country

favor Eastern-oriented foreign policy. The divergent agendas of the different domestic actors make the

domestic bargaining process a very important aspect of Ukraine‘s foreign policy-making process. Detail on

the relevant domestic actors, their agendas, and their importance in Ukrainian politics will be provided in

chapter 4 of this thesis.

1.1. Politics in Ukraine The key political institutions in Ukraine are threefold: the presidency, the cabinet and the parliament.

Ukraine can be characterized as having a semi-presidential political framework. This means that the

president of the nation is elected by universal suffrage, possesses considerable executive powers but is

constrained by a prime minister and cabinet who possess executive and governmental powers. The

president nominates a prime minister, who has to be confirmed by the parliament. The parliament is a

unicameral body consisting of 450 deputies who are elected for four years, and has the power of

impeachment over the president (Zimmer, 2006, p. 281). Built-in characteristics of a semi-presidential

system are, according to Protsyk (2003a, p. 433), competing political competences, differing electoral

bases, often opposite ideological orientations of the president and parliament and rigid terms of office

(Duverger, 1980, cited in: Protsyk, 2003b, p. 1092).

The importance of the presidency in Ukraine is amplified by the fact that the constitution of Ukraine

grants the president the power to issue binding decrees, as long as these decrees do not contradict

4 The Commonwealth of Independent States (CIS) was created in 1991 by Russia, Ukraine and Belarus as a replacement of the Union of Soviet Socialist Republics (USSR). The CIS currently includes Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine. In 1993, the heads of these countries agreed to form an economic union. Cooperation also takes place with regard to law enforcement, defense and immigration policies and environmental regulation.

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constitutions or laws adopted by the parliament (Protsyk, 2003a, p. 428). These decree powers have been

actually used by presidents on more than 20 occasions since Ukrainian independence, dealing exclusively

with EU-Ukraine relations, such as setting up organs dealing with the EU, formulating programs to match

Ukrainian norms and values with those of the EU, etc. (Protsyk, 2003a, p. 429). Both president and

parliament effectively are, according to Protsyk (2003b, p. 1078) the principle of the prime minister and

his/her cabinet. The cabinet faces thus has two different principles, which often have different electoral

bases and ideological positions. The following table provides an overview of the presidents and prime

ministers that were in office since the Ukrainian independence, and succinctly shows their foreign policy

orientation.

Year President Prime-minister Foreign policy orientation president

Dec. 1991 - Jul. 1994 Leonid Kravchuk Vitold Fokin (‘92-3), Leonid Kuchma (‘92-3)

Very pro-Western.

Jul. 1994 – Dec. 2004 Leonid Kuchma Yuhym Zvyahil‘ski (‘93-4), Vitali Masol (‘94-5), Yevhen Marchuk (‘95-6), Pavlo Lazarenko (‘96-7), Valeri Pustovoitenko (‘97-9), Viktor Yushchenko (‘99-01), Anatoli Kinakh (‘01-2), Viktor Yanukovych (‘02-4)

Moderate pro-Western while acknowledging necessity of cooperation with Russia. In the beginning of his term very focused on the West and in favor of EU membership, but as Western interest waned focused on Russia at the end of the 1990s.

Dec. 2004 – Jan. 2010 Viktor Yushchenko Yulia Tymoshenko (Jan.-Sep. ‗05), Yuriy Yekhanurov (‗05-6), Viktor Yanukovych (‘06-‘07), Yulia Tymoshenko (‘07-Mar.‘10)

Pro-Western, in favor of EU membership.

Jan. 2010 – present Viktor Yanukovych Mykola Azarov Ambivalent at times, but primarily pro-Russian, supported by Putin and Russians in Ukraine.

Table 1.1: Overview of presidents and prime ministers and their respective policy orientation in Ukraine since 1991, based

on own assessment.

The fact that the parliament in Ukraine is fragmented and subject to clientelism makes it often difficult to

choose a prime-minister. This deadlock of the parliament is often exploited by the president to construct a

majority around his choice of prime-minister (Protsyk, 2003a, p. 433). Despite the power of the president

over the prime-minister, history shows that there have been prime-ministers in Ukraine that openly

confronted the president. Their motivation for doing this, while risking dismissal by the president, resides

in the fact that when they enter the presidential election race after such conflicts, they are serious

contenders for the presidency. Moreover, prime-ministers, because of their control over government

resources, are able to organize electoral coalitions and party machines in their own favor (Protsyk, 2003b,

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pp. 1081-2). So although most of the political power in semi-presidential systems resides with the

president, the power of prime-ministers in Ukraine should not be underestimated.

1.2. Theoretical Framework As explained in the above, Ukrainian politics are to a large extent shaped by the particular situation of the

country, which shows a wide ranging constellation of domestic interests relevant for foreign-policy

positioning between East and West. In order to come to a structural assessment of how these different

interests shape the Ukrainian foreign-policy making process, the liberal-intergovernmentalist theory will be

used. This is done because liberal intergovernmentalism, by viewing the foreign policy goals of a country

as varying in response to shifting pressures from domestic interest groups, explicitly takes domestic factors

into account when reviewing a country‘s policy-making process (Moravcsik, 1993, p. 481). This section

will provide a brief outline of the theoretical framework that is central to this research. A detailed

overview of the theoretical framework is provided in chapter 3.

International Relations (IR) provides the overarching disciplinary framework this research fits in. Within

this general disciplinary context, the meta-theoretical framework employed consists of two paradigms

within IR that are seemingly contradictory: Liberalism and Intergovernmentalism. Liberal theories of IR

set up the individual and private groups with autonomous interests as the core actors in politics. These

groups and individuals form the basis of state priorities and policies, as governments are embedded in

domestic and transnational civil society and therefore respond to the preferences of these domestic

groups. The most influential groups are those who stand to lose or gain the most from government policy

(Moravcsik, 1993, p. 483). The intergovernmentalist approach stresses the importance of the power and

interests of governments in the international system, a system based on interstate bargains between its

leading member states. This might seem to conflict with the fact that many societal interests are

transnational. According to Moravcsik (1991, p. 25), however, ‗even when societal interests are

transnational, the principal form of their political expression remains national‘. Exemplary is the

importance of the European Council of the EU, which is an intergovernmental body which still defines

the general course of the EU.

1.2.1. Liberal intergovernmentalism (LI)

Liberal intergovernmentalism is thus based on the liberal theory of national preference formation, on the

one hand, and an intergovernmentalist approach to interstate bargaining and the creation of institutions,

on the other (Moravcsik, 1993, p. 482). Liberal intergovernmentalism posits that national interests are not

merely dictated by international anarchy and distribution of power, but are the product of policy goals

determined by the domestic political system. Domestic actors with different policy preferences aim to

influence national policy to their advantage. To understand policy preferences is to understand the

domestic political conflicts of a country. The LI approach hereby offers a clear analytical framework to

analyze a country‘s (foreign) policy preferences. For Ukraine, this approach is possibly even more useful

than for other countries, because the constellation of interests in Ukraine is such that there are many

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powerful societal actors with very wide ranging interests, these interests being institutionally organized and

represented. The Ukrainian domestic political structure, therefore, makes the country very suitable for

study through the liberal intergovernmentalist framework.

The liberal intergovernmentalist approach provides me with a ‗theoretical toolbox‘ to sketch the situation

of Ukraine: By developing an assessment of the domestic interest groups competing for political influence

in Ukraine, and by mapping the national bargaining process, I will obtain a picture of the Ukrainian policy-

making process, on national as well as foreign policy issues. This makes it possible to explain Ukraine‘s

positioning between East and West.

1.2.2. Modes of External Governance

The second part of this research will assess the European Neighborhood Policy (ENP) towards Ukraine.

Is the ENP properly adjusted to the Ukrainian balancing act between East and West? Is the ENP the right

tool for Europe in its relations with Ukraine? In order to address these issues in a structured way, my

analysis of the ENP towards Ukraine is based on the theoretical vocabulary offered by Lavenex and

Schimmelfennig (2009), who categorize EU external governance into three modes: hierarchical

governance, network governance and market governance, explained in more detail in chapter 3. Using

these modes of governance will enable me to categorize the ENP towards Ukraine, which makes it

possible to analyze more systematically whether the current ENP towards Ukraine is effective and

correctly adjusted to the constellation of interests in Ukraine. Lavenex and Schimmelfennig do not

provide a way of categorizing EU external governance more specifically using these three modes.

Therefore, this research will use their work in chapter 3 to set up indicators for identifying which mode of

governance is in place in ENP relations with Ukraine, which enables me to discuss the implications of that

mode and how it fits with the insights obtained in the empirical part of this research.

1.3. Research question and subquestions This research is inspired by Ukraine‘s balancing between the Eastern vector and the Western vector, and

tries to gain insight into why Ukrainian foreign policy and its subsequent positioning between East and

West is the way it is. It will employ the liberal intergovernmentalist approach to explain how domestic

actors shape Ukrainian foreign policy and thereby its positioning between East and West.

After looking at Ukraine‘s foreign policy preferences and its position using the LI approach, I want to

look at the extent to which the ENP towards Ukraine is correctly adjusted to the country and its specific

policy making process. This could provide insights into how the EU‘s policy towards Ukraine could be

improved.

The research question of this thesis is the following:

How can liberal intergovernmentalism explain the way domestic societal actors configure Ukrainian foreign policy preferences

and its position between the EU and Russia, and are these insights reflected in the European Neighborhood Policy towards

Ukraine?

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In order to answer this research question, a number of subquestions are considered in different chapters:

I. What are the main domestic societal actors in Ukraine and what is the nature of their interests?

II. How does the domestic bargaining process in national preference formation take place?

III. What is the relative influence on Ukrainian foreign policy of the domestic societal groups, and

how does this influence Ukraine‘s position between East and West?

IV. To what extent does the ENP reflect these insights, and how might the EU‘s Ukraine policy be

improved?

Chapter 4 aims to answer the first sub-question. Sub-questions II and III are addressed in chapter 5. The

fourth sub-question is answered in chapter 6.

To clarify what is meant in this research by the concepts of foreign policy preferences and Ukrainian

positioning between the EU and Russia, I will define them as follows: The foreign policy preferences

affecting the subsequent positioning between the EU and Russia at stake here are the preferences which

indicate either Ukraine‘s willingness to make the steps necessary for closer integration with the European

Union, or whether its foreign policy is aimed at closer political and economic integration with Russia

(Larrabee, 2006, p. 93; Kuzio, 2006, p. 89-90). Is Ukraine leaning towards the Eastern vector or towards

the Western vector, or is it pursuing a policy of multi-vectorism?

Domestic societal groups are defined as being ‗any domestic constituency whose support may be critical

for the promulgation and implementation of policy‘ (Moravcsik, 1994, p. 4).

1.4. Significance This research will look at how Ukrainian foreign policy preferences are formed by applying the liberal

intergovernmentalist approach. Then I will look at whether these insights are reflected in the ENP, and to

what extent the ENP towards Ukraine can be improved. First, this section will outline the scientific

relevance of studying Ukraine the way this research does, using the LI approach. Hereafter I will explore

the economic and strategic reasons for which insights into the Ukrainian foreign policymaking process

and the appropriateness of the ENP are important for the EU.

1.4.1. Scientific Relevance

Much has been written with regard to Ukraine‘s European aspirations and how they evolved over the past

decades (Wolczuk, 2004, Turczyński, 2005, Gatev, 2004, Kuzio 2003, 2006, Larrabee 2006). However, to

what extent the European cold shoulder has contributed to Ukraine‘s foreign policy positioning between

East and West has not been studied extensively. White, Light and Lowenhard (2001) focused their study

on this choice between East and West, providing data on public attitudes in Ukraine, among other

countries, towards the European versus the Slavic choice. What their research lacks, however, is insight

into how these domestic preferences in Ukraine are translated into actual national policy. They do not

provide insights into the national bargaining process, where it is determined which constellation of

interests will prevail over others.

16

To ignore the domestic actors and their bargaining process is problematic for several reasons. As indicated

before, the LI paradigm attributes significant influence to domestic politics in the foreign policy-making

process. To ignore the domestic political conflict and preference formation process, is to ignore an

important part of the policy-making process. Moreover, domestic politics in Ukraine are very suitable for

study along LI lines. Firstly, as indicated before, Ukraine‘s population is divided along religious, cultural,

ethno-linguistic and political lines (Wolczuk, 2004, p. 8). These different groups in Ukrainian society differ

widely with regard to their policy preferences. Secondly, the Ukrainian domestic political structure

provides ample room for non-state actors to affect both national and foreign policymaking. Oligarchic

groupings play a significant role in Ukrainian politics, as many oligarchic groups (or ‗clans‘ as they are

called) are directly involved in politics. A part of the Ukrainian elite strives for European integration

because of its proclaimed benefits for capitalist development and their own specific business interests

(Molchanov, 2004, p. 463). Others, however, favor stronger ties with Russia. As indicated before, the

Ukrainian economy is penetrated by large Russian financial-industrial conglomerates. These business elites

have grown larger and hold cross-border interests in favor of Russia. In sum: the Ukrainian society shows

large divisions with regard to economic, political and cultural policy preferences; each societal group

participates in the national bargaining process in order to see its preferences reflected in Ukrainian

national and foreign policy. Therefore, it is very important not to treat Ukraine as a single-minded entity

and to ‗open the black box‘ of this nation state, not merely by looking at public opinion but by looking at

the domestic political process as a whole.

Moreover, the scientific relevance of this research is strengthened by the application of the theory of

liberal intergovernmentalism, which enables me to assess the value of this theory for studying European

integration in the context of the European neighborhood.

1.4.2. Economic and Political Relevance

Since the accession round of 2004, Ukraine borders the EU along the member states Poland, Slovakia and

Hungary. Amongst other reasons, the existence of historical ties, extensive shuttle trade and ethnic

minorities on both sides of the borders make a good relationship with Ukraine important. The insights

this research provides could be of great importance for the EU and its policy towards Ukraine: Ukraine is

strategically and economically important for the EU, and vice versa. The EU needs a stable Ukraine, and

Ukraine needs a trustworthy and open EU (Wolczuk, 2005, p. 2).

The economic importance of Ukraine for the EU lies mainly in the potential market that resides in

Ukraine. Up until the global financial crisis starting in 2008, the country boasted high economic growth

rates. In 2005, the EU was Ukraine‘s second largest trading partner (after Russia), accounting for 30% of

Ukraine‘s exports and 33% of its imports (Jakubiak& Kolesnichenko, 2006, p. 15). To further

institutionalize political relations with Ukraine could help address relevant trade issues. Economic

cooperation since 2005 has been organized through the ENP Action Plan, which envisages further

economic liberalization of Ukraine (Jakubiak & Kolesnichenko, 2006, p. 15).

17

Good relations with Ukraine also have strategic value for the EU. Firstly, the EU is concerned with the

economic and political transition of many of the former Soviet countries, especially because these

countries harbor significant ‗soft‘ security threats such as organized crime, drug trafficking, illegal

immigration and nuclear safety concerns (Zagorski, 2004, p. 80). Stable relations with Ukraine imply more

security as regards these issues. Furthermore, Ukraine is thought to be able to play a significant role in

solving the Transdniestria conflict in Moldova.

The third and highly significant reason for why good relations with Ukraine are important for the EU is

European energy security. Good and stable relations with Ukraine are required to secure the supplies of

energy that flow from Russia through Ukraine (Linkevičius, 2008, pp. 70-71). Moreover, despite its

borders with the EU on one side, Ukraine is located in a potentially instable region. Closer ties with

Ukraine could provide the EU with a reliable partner in this potentially instable region (Wolczuk, 2005, p.

3). The importance of good relations with Ukraine is underlined in active EU-Ukraine cooperation in

several sectors, notably energy, transport, telecommunications and research. Since a joint summit in

December 2005, the Ukrainian energy sector (gas and electricity) has become increasingly integrated in the

domestic energy market for the EU.5 Furthermore, cooperation takes place for forming a single air space

and via Ukraine‘s involvement in the EU Space program and its participation in the Galileo project

(Jakubiak & Kolesnichenko, 2006, pp. 15-17).

In order for the EU to approach Ukraine with a proper strategy that can enhance the bilateral relations

between Ukraine and the EU, it is important to be aware of how the foreign policy formation of Ukraine

takes place. I will assess whether the ENP is correctly adjusted to the balancing act of Ukraine between

the Eastern and the Western vector, and whether it takes into account the specific process of national

bargaining and preference formation in Ukraine. This enables me to make an assessment of which parts of

the ENP towards Ukraine should be improved in order for the EU to develop closer relations with

Ukraine and to achieve its economic and political goals for and with the country.

1.5. Methodology This research is both theoretically guided and empirical in nature. The theoretical part of this research

consists mainly of applying the liberal intergovernmentalist theory to Ukraine. The empirical nature of this

research resides mainly in mapping the domestic interest groups in Ukraine and examining their relative

influence on foreign policy as well as the outcomes of this influence. Firstly, the different domestic

interest groups and their bargaining power at the national level will be assessed, after which I will evaluate

how domestic interest groups influence Ukrainian foreign policy and thereby its positioning between East

5 The EU is currently undertaking reform and integration efforts aimed at creating a common energy market in order to strengthen its energy security. After the 2006 Green Paper on energy, steps are being taken to create common gas and electricity markets. Ukraine is participating in numerous EU energy initiatives. In 2005, a memorandum has been signed that envisages a gradual integration of Ukraine‘s gas and electricity sector in the European market. This includes common rules on amongst other issues trade, investment and transit (Jakubiak & Kolesnichenko, 2006, pp. 78-79).

18

and West. Hereafter this research looks at how this policy process and positioning can be influenced by

the EU, and whether or not this should take place in the current form of the ENP.

1.5.1. Applying the LI approach to Ukraine One of the methodological advantages of using the LI approach in this research is that the theory

provides a convenient analytical framework. This research will be based on this framework, applying the

general LI scheme to the case at hand. While LI as put forward by Moravcsik looks at three levels of

European integration (the formation of national preferences, the outcome of intergovernmental

bargaining and the subsequent choice of institutions), this research looks at mainly the first two levels: the

national bargaining process and the domestic groups involved, and the subsequent translation of this

process into foreign policy. The third level, the choice of international institutions, is not studied in depth

in this research, as I will look at Ukraine‘s positioning between two already existing ―institutions‖: the EU

and Russia. The ENP itself is, however, an institution as well. Ukraine‘s participation in the ENP can be

seen as the outcome of the first and second level studied in this thesis.

The first methodological step is to devise an analytical framework based on the LI approach, in order to

map and explain the relations between domestic interest groups, the national bargaining and preference

formation process, and the effects this has on Ukraine‘s foreign policy. The information on liberal

intergovernmentalism as a theory used for constructing this framework is derived from the work of

Andrew Moravcsik, most notably his article ―Preferences and Power in the European Community: a

Liberal Intergovernmentalist Approach‖ (1993), in which he first drew up his argument. Aside from the

wide range of articles Moravcsik has written on his theory (1993, 1994, 2003, 2005, 2009), I look at

critique on LI by Antony Forster (1998) and the work of Jupille and Caporaso (1999).

1.5.2. Secondary literature

The first three sub-questions will be answered through the use of secondary literature. Once a framework

is devised, the second step is to gather data concerning the different variables in the process: thus on

domestic actors, the national bargaining process and national preference formation. The data that will be

considered will be acquired through the use of scholarly literature written by experts on Ukraine. The

most prominent works are those of Kataryna Wolczuk (2004, 2006), who is one of the leading experts on

Ukraine‘s political scene and its institutions, which provide me with an extensive overview of the

Ukrainian integration process with the EU. Together with Melnykovska (2008), Protsyk (2003), and

Turczyński (2005), the work of Wolczuk will form the basis of the sketch of Ukrainian domestic societal

actors and the process of national bargaining. Besides these key sources, a range of literature is reviewed

based on the information it provides on domestic groups and the national bargaining and preference

formation process.

One reason to use secondary literature instead of analyzing Ukrainian public opinion and interest group

politics through polls and newspapers has been elaborated in paragraph 1.4.1. An additional reason, as

Wolczuk (2004, p. 9) points out, is that the Ukrainian elite has a big share in shaping Ukrainian policy

19

preferences, which makes Ukraine‘s orientation at times largely a product of elite preferences, rather than

a product of endorsements or opposition from society. A review of public opinion as measured by polls

as, for example, provided by White et al. (2001), therefore, would not suffice to obtain a full picture of the

national bargaining and preference formation process in Ukraine. In order to obtain a full picture of the

different domestic groups, the use of specialized secondary literature which covers the various interest

groups in Ukraine, such as the business elites, is important. What are the exact domestic interest groups,

what are they after, and what is their relative influence in the national bargaining process in Ukraine?

1.5.3. Analyzing the ENP

In my last two steps I will use the empirical knowledge acquired based on the LI approach to analyze the

European Union policy towards Ukraine embodied in the ENP. In order to do this systematically, I will

use a theoretical vocabulary devised by Lavenex and Schimmelfennig (2009). They identify three basic

modes of external governance: hierarchical, network, and market governance. This research will try to

define the mode of governance for EU-Ukraine relations, and look at whether this suits the typical EU

Ukraine relations and the foreign policy formation process of Ukraine. The analysis of the ENP is also

based on secondary literature, especially the article of Lavenex and Schimmelfennig (2009) ―EU rules

beyond EU borders: theorizing external governance in European politics‖. The advantage of using their

theoretical vocabulary is that the categories their modes of governance provide make it possible to clearly

identify the ‗governance package‘ the ENP offers. A disadvantage is that Lavenex and Schimmelfennig

themselves do not provide a method for categorizing policies, for deciding when a certain policy falls into

a certain category. Therefore, I will further operationalize the three modes of governance as provided by

Lavenex and Schimmelfennig in order to categorize the ENP. Once the ENP is categorized along the

modes of governance approach, I will assess whether the ENP is correctly adjusted to the balancing act of

Ukraine between the Eastern and the Western vector, and whether it takes into account the specific

process of national bargaining and preference formation in Ukraine. This will, in turn, make it possible to

answer the question which parts of the ENP towards Ukraine should be improved in order for the EU to

develop closer relations with Ukraine (sub-question 4).

1.5.4. Reliability

The reliability of the results of this research is enhanced by the fact that both analyses in this research

(determining Ukraine‘s positioning between East and West and the appropriateness of the ENP towards

Ukraine) are based on explicit theoretical approaches. The theoretical approaches provide the general

framework within which the empirical analysis is developed. One would expect to see the same results in

future attempts at replication, if future research is based on the same general frameworks. This naturally

might not be the case if this future research would be conducted based on different data.

As indicated before, the theory of liberal intergovernmentalism provides a toolbox for analyzing Ukraine‘s

foreign policy-making. The same steps that are followed in this research could be replicated by other

researchers, which would yield the same results. Moreover, this research could be replicated for other

20

countries. This is less straightforward in the case of the theoretical descriptions of Lavenex and

Schimmelfennig (2009), as these authors did not themselves devise indicators for which mode of

governance is in place in which situation. Therefore, I had to devise such a framework of indicators

myself. In order to ensure the replicability of this research, I have chosen to remain as close to the

theoretical descriptions of Lavenex and Schimmelfennig as possible.

1.5.5. Validity Cook and Campbell (1979, p. 37) define internal validity as ‗best available approximation to the truth or

falsity of a given inference, proposition or conclusion‘. In this research, the main concern with regard to

validity is construct validity: Whether my conceptualization of ‗Ukrainian foreign policy preferences and

its positioning‘ is valid. To ensure that this is what I am really measuring, it is important to conceptualize

what, in this research, is exactly meant by ‗foreign policy preferences and positioning‘. A conceptualization

of ‗positioning‘ has been provided in paragraph 1.2 as being the balance between preferences which

indicate either Ukraine‘s willingness to make the steps necessary for closer integration with the European

Union, or whether its foreign policy is aimed at closer political and economic integration with Russia

(Larrabee, 2006, p. 93; Kuzio, 2006, p. 89-90).

1.6. Overview This research is structured as follows: Chapter 2 provides a historical overview of Ukraine and its relations

with the European Union. It explains how this relation has evolved ever since Ukraine became an

independent country in 1991. Moreover, it looks at the initiatives that have been taken to integrate

Ukraine more closely with the EU, with a special focus on the European Neighborhood Policy. Chapter 2

will also look at Ukraine‘s relations with Russia, and how they have evolved in parallel with Ukraine‘s

relations with the West.

Chapter 3 concerns the theoretical framework that is central to this research, liberal intergovernmentalism.

In this chapter, liberal intergovernmentalism as a theoretical framework is described. Based on the liberal

intergovernmentalist theory, an analytical framework is constructed which provides a step by step

approach to applying the liberal intergovernmentalist approach to the case at hand. The second section of

chapter 3 will elaborate on a theoretical vocabulary provided by Lavenex and Schimmelfennig that enables

me to analyze the ENP towards Ukraine.

Chapter 4 is the first part of the empirical section of this research. This chapter provides an outline of the

main domestic actors in the Ukrainian foreign policy-making process and their foreign policy preferences.

This is done by assessing the overall domestic political context of the country. However, as this research

will show, Ukraine is not a proper democracy. By merely looking at formal institutions and their formal

relations, one fails to capture the essence of the Ukrainian domestic preference formation process,

because a share of the Ukrainian domestic bargaining process takes place in the shadow of the formal

political and institutional framework. Therefore, in order to properly understand how the process of

domestic bargaining and preference formation takes place in Ukraine, chapter 4 will also focus on the

21

political process below the formal surface, in other words the more informal and obscure aspects of

Ukrainian politics.

Chapter 5 takes the findings of chapter 4 as a point of departure, as it discusses which interests prevail in

the Ukrainian bargaining process. This will be done by assessing how the preferences of the domestic

actors translate into Ukrainian foreign policy preferences, and how this process is shaped by the relative

bargaining power of the different domestic groups involved.

After the empirical research presented in chapters 4 and 5, the sixth chapter will focus its attention on the

European Neighborhood Policy towards Ukraine. The effectiveness of the ENP towards Ukraine will be

analyzed with the ‗modes of governance‘ approach provided by Lavenex and Schimmelfennig. In this

chapter, I will try to define the mode of governance for EU Ukraine relations, and look at whether this

mode of governance is appropriate for the case of Ukraine. Based on the empirical knowledge acquired on

Ukraine, the question to be answered in this chapter is whether the ENP towards Ukraine is attuned to

the particular foreign policy making process in Ukraine and whether the ENP takes the particularities of

Ukraine‘s national preference formation process into account. Based hereupon, I will provide some policy

recommendations for the EU to adequately deal with the foreign policy formation process of Ukraine.

The conclusion will return to the research question how the theory of liberal intergovernmentalism can

explain how domestic actors shape Ukraine‘s foreign policy preferences and its positioning. After

assessing whether the ENP towards Ukraine is adjusted to the Ukrainian preference formation process, I

will assess what conclusions we can draw from the empirical work conducted in this research for the

broader theoretical framework of liberal intergovernmentalism.

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2. Historical framework: EU-Ukraine relations since independence

Does being a country that is without doubt geographically located in Europe, that bears the most

fundamental transportation routes between Europe and Eurasia, that has stated over and over again it

wants to become an EU member, and that has been the fourth largest coalition partner of the forces in

Iraq make a country an EU member state? Not at all, as the case of Ukraine demonstrates (Molchanov,

2004, p. 45). Despite repetitively articulating its European aspirations, Ukraine still has no short term

prospect of becoming an EU member. This chapter provides a historical overview of Ukrainian politics

since 1991. It explains how the relationship between Ukraine and the EU has evolved ever since Ukraine

became an independent state. Moreover, this chapter looks at what the consequences of this relationship

have been for the status of Ukraine in EU foreign policy and vice versa.

2.1. Independence More than seventy years after Ukraine had last formed an independent government, it became an

independent state in 1991. The leader of the former Ukrainian Communist Party, Leonid Kravchuk, was

to be its first president. He faced the daunting task of creating national institutions that had been absent

for so long, hoping to stabilize the country. These very first years of Ukrainian independence are termed

by Pavliuk (2002, p. 82) as years of Western neglect. The European Union focused its financial assistance

very much on Russia, under the prevailing sentiment that a successful Russian transformation would

define the success or failure of the other post-Soviet states. This period of neglect lasted for two years,

until in 1993 the geopolitical importance of Ukraine started to become visible. As Russia started to

manifest itself more assertively than before, around 1993-4, it signed a trilateral agreement with Ukraine

and the United States (US) with regard to the denuclearization of Ukraine. This was the start of a new

Western attitude towards Ukraine (Pavliuk, 2002, pp. 82-83).

Reform, however, never goes by painlessly, and the problems that came along with this troublesome

transition appeared to become the stumbling block for Kravchuk in the presidential elections in 1994.

Leonid Kuchma, Kravcuk‘s successor, tried in the following years to stabilize Ukraine by pursuing a

‗Western-oriented‘ approach of governance, coinciding with the ‗new Western attitude‘ (De Souza,

Schweickert, Movchan, Bilan, Burakovsky, 2006, p. 144; Pavliuk, 2002, p. 83).

2.2. The European Choice The announcement of a liberalization of the Ukrainian economy as well as Ukrainian accession to the

Non-Proliferation Treaty in 1994 marked this new stance of Ukraine vis-à-vis the West. Although

consensus on the orientation of foreign policy was largely absent in Ukraine, Ukraine‘s positioning

between East and West up until then had been one of ‗non-alignment with a Western tilt‘ (Turczyński,

2005, p. 49). Under Kravchuk, a political dialogue with the European Union was opened in 1994 in the

form of a Partnership and Cooperation Agreement (PCA). This PCA provided for political dialogue

between Ukraine and the EU, covered trade in goods and services as well as facilitated annual meetings

23

between EU representatives and the Ukrainian president. At the same time, a Cooperation Council was

constructed, covering issues ranging from trade via the movement of capital to rules of competition and

property rights (Turczyński, 2005, p. 51). The political dialogue was, however, tied to conditionalities

regarding political and economic reform.

It was around 1996 that Kuchma started to articulate in strong terms Ukraine‘s desire of strong ties w ith

the EU, possibly even EU membership, even stating that ‗God wants Ukraine to be in Europe‘ (qtd. in:

Kuzio, 2003, p. 23). Pavliuk (2002, pp. 83-84) calls this period one of Western embrace. The European

Council had approved the Action Plan for Ukraine in 1996, which embodied support for economic

reforms, assistance in the transition, the integration of Ukraine into the European security structure, the

promotion of bilateral and regional cooperation and aid with regard to energy sector reform (Turczyński ,

2005, pp. 51-52). A common European strategy for Ukraine was drawn up in Vienna in 1998, again with

support for political and economic reforms. The Common Strategy was aimed at closer cooperation

between the EU and Ukraine, and would be a response to the European aspirations of Ukraine, albeit that

it was not as warm a welcome to Ukraine‘s membership aspirations as Ukraine had hoped (Turczyński,

2005, p. 53).

Ukraine‘s motivation for integrating with the EU was both strategic and economic. Ukraine‘s state of

technology and competiveness lagged (and still lags) far behind as compared to western European

countries, and therefore EU membership could bring along very welcome investments, assistance and

credits (Wolczuk, 2004, p. 7).

2.3. Declaration without integration This ‗European choice‘ of Ukraine remained shadowed, however, by a reluctant commitment of the

Ukrainian government to pursuing actual political and economic reforms. Pavliuk (2002, p. 84) asserts that

this reluctance to reform was aggravated by the hunch of Ukraine‘s leaders that Ukraine‘s geopolitical

significance as a counterbalance to Russia would enable it to be forgiven for its disinclination to reform.

While the potential economic and geopolitical value of Ukraine were recognized in the West, the country

still managed to achieve very poor democratic reform, its government policies remained opaque and

inconsistent, and the economy remained unreformed (Turczyński, 2005, p. 52). The last years of the 1990s

were years of Western frustration, Pavliuk argues. Ukraine‘s problems seemed political in nature: the

commitment of the Ukrainian politicians to actually pursue the goals needed for good relations with the

EU was questionable (Wolczuk, 2004, p. 2). Sherr (qtd. in Wolczuk, 2004, pp. 2-3) eloquently formulated

this problem:

Ukraine‘s political leaders have sometimes acted as if they could achieve integration by declaration,

or simply by joining and participating in international organizational and political clubs rather than

by undertaking concrete structural changes.

24

According to Kubicek (2005, p. 269), there has always been ‗a substantial disconnect between the rhetoric

of Ukraine‘s ―European choice‖ and the authoritarian trends in the country‘. In the late 1990s, anti-

European sentiment was on the rise in Ukraine. The antipathy against the West and the growing pro-

Russian sentiment was manifested in Ukrainian responses to the Kosovo war in 1999. Many Ukrainians

condemned the NATO bombings on Yugoslavia, and thought Slobodan Milosevic was not responsible

for the conflict (Turczyński, 2005, p. 3; Buckley & Cummings, 2001, p. 181). In order to get re-elected,

Kuchma decided to lift his focus on Europe and use nationalist maxims in his election campaign,

propagating nationalist-communist ideas. Paradoxically, at the same time he broadened his institutional

powers through a referendum in April 2000, in order to cope with his ‗anti-European‘ parliament and

pursue his pro-European strategies (Turczyński, 2005, p. 54). According to Pavliuk (2002, p. 85), during

this period the West lacked understanding on what was going on in Ukraine, why its reforms were lagging

behind and what could be done to turn the tables.

Societal support for European integration in Ukraine is difficult to assess due to the divisions that

permeate Ukrainian society (Wolczuk, 2004, p. 8). Between 2001 and 2003, support for EU membership

fell by a third, while support for closer ties with Russia grew. Still, 55% of the population remained in

favor of EU membership, with only 18% against (Vahl, 2004, p. 2). Closer integration with Eastern

neighbors Russia and Belarus, however, received a much stronger vote: 69% in favor, 19% against. If the

‗do not know‘-answer category is not taken into account, the Western and Eastern vector draw 75% and

78% of support, respectively (Vahl, 2004, p. 2). Because of this societal ambivalence, much of Ukraine‘s

foreign policy (certainly in the pro-European period) has been the result of elite preferences, as the elite

seems to make use of the internal divisions to pursue its own agenda (Wolczuk, 2004, p. 9).

2.4. Domestic trouble and the renewed Russian interest The elections of 2000 brought a parliamentary victory for the non-leftists, which paved the way for a

government led by Viktor Yushchenko, who was known to be a reformer. For a very short moment, it

seemed as if Ukraine finally had found a consensus on the economic reforms needed in the country. Even

the strong business Russian community in Ukraine seemed to lay low.6 This was the exact same period

that Vladimir Putin became president of Russia. This had implications for the EU‘s foreign policy as well

as for Ukraine. The EU‘s stance towards Russia changed, as Putin offered safer energy supplies than the

Middle East. For Ukraine, the attractiveness of Russia resided in the investments that it could make.

Meager European investments in Ukraine and the urgent need for external financing in order to cover the

6 Meager European investments in Ukraine during the 1990s, and the urgent need for external financing in order to cover the Ukrainian deficit, opened the doors for Russian companies, leading to a growing Russian influence in Ukrainian society. Russian investment in Ukraine takes the form of large Russian financial-industrial conglomerates. Despite the financial crisis in which Russia found itself during 1998, Russian corporations managed to add to their possessions Ukrainian steel and automotive plants (Gatev, 2004, p. 4; Puglisi, 2003, pp. 832-322). These business elites naturally favor stronger economic ties with their home-country Russia. But in the beginning of Yushchenko‘s time in office, these businessmen did not oppose Yushchenko‘s regime for reform. It seems as though their reluctance to interfere with his government was inspired by their interests in keeping Ukraine buoyant with some very urgent reforms. After these urgent reforms had been implemented, they wanted Ukraine‘s policy again to turn towards Russia, and the pro-European Yushchenko did not fit into this picture (Pavliuk, 2002, p. 86).

25

Ukrainian deficit opened the doors for Russian companies, leading to a growing Russian influence in

Ukrainian society. The situation in Ukraine started to get chaotic. On September 16, 2000 an opposition

journalist, Georgiy Gongadze, was murdered under mysterious circumstances, spurring rumors that this

was a hit ordered by Leonid Kuchma himself (Kuzio, 2002, p. 23). Shorty hereafter, Kuchma brought

himself into tremendous international difficulties by selling the Kolchuga radar system to Iraq,

contravening the UN sanctions against the country (Kuzio, 2002, p. 25).

Domestic politics were equally tumultuous. Prime minister Yuschenko was being overthrown by oligarchs

who feared his policy in the energy sector was interfering with their interests (Turczyński, 2005, p. 55;

Pavliuk, 2002, p. 87). The increasing powers of president Kuchma, which he secured by referendum,

threatened Ukraine‘s juvenile democracy. According to Pavliuk, (2002, p. 87), the West could have played

a significant role in stabilizing the troubled country, but failed to do so. Yushchenko, who acquired his

position as a prime minister in part because of European lobbying, did not get any support from the EU.

In fact, it seemed as though all the European disillusionment and frustration with regard to Ukraine‘s

lacking reforms ‗hit hardest the government that deserved it least and at the most inappropriate moment‘

(Pavliuk, 2002, p. 88).

Russian president Putin quickly made use of the political tumult in Ukraine, during which he was able to

enforce extensive economic and military agreements with the country. Putin was able to grip Ukraine

because of the very large energy debts it had to Russia, using the ‗commodity weapon‘ in its relation with

Ukraine (Turczyński, 2005, p. 55).

2.5. The Orange Revolution The autumn of 2004 brought winds of change for Ukraine. The elections were mainly a run-off between

two heavyweights: Viktor Yanukovych, the prime minister of Ukraine at the time under Leonid Kuchma,

and Viktor Yushchenko. While Yushchenko ran his campaign with a charismatic air which echoed change,

Yanukovych ran a conservative campaign, focusing on security issues and on maintaining the status quo.

It was not so much his program that was opposed by many: His statements of seeking closer ties with

Russia were backed by many Ukrainians in the East. Rather it was his methods of winning the elections,

which were said to be ruthless, that were subject to critique. 7 Not only was Yanukovych backed by

President Kuchma, he equally had support from his Russian counterpart, Vladimir Putin. Putin visited

Kiev multiple times prior to the Ukrainian elections. During his visit on Oktober 26/27 2004, he

announced his support for Yanukovych, and offered the Ukrainians significant economic benefits as well

as looser visa regulations (Turczyński, 2005, p.61, 64).

The outcome of the first round of the elections was very close: Yanukovych won with 39,87% of the

votes, whereas Yushchenko received 39,32%. The outcome was contested, however. Leonid Kuchma, for

7 Yushchenko was forced to leave his campaign midway due to health problems. It appeared his problems were caused by poisoning. With his face disfigured due to the disease he returned to the campaign later on. Rumor went that Yanukovych‘s backers were involved in this mysterious poisoning (Turczyński, 2005, pp. 60-61).

26

one, had fired all the heads of local administrations in the regions where Yushchenko had won, ‗not even

trying to disguise [Kuchma‘s] intentions to steal the election for Yanukovych‘ (Turczyński, 2005, p. 64). As

a response to these questionable election results, the EU responded stating its ‗regrets that the first round

of the presidential elections in Ukraine on 31 October did not meet international standards for democratic

elections‘ (Council of the European Union, 2004). In the second round of the elections, Yanukovych won

with 49,46% versus 46,61%. According to the Polish Gazeta Wyborcza, however, around 3 million ballots

(which is about 10-11% of the total ballots) had been falsified (cited in: Turczyński, 2005, p. 66). The

Council responded by stating the elections did not meet international standards. Jan Peter Balkenende,

who then held the Presidency of the European Council, stated that the European Union was unable to

accept the election results.

The fraudulent elections triggered tensions in Ukraine, leading to mass demonstrations led by

Yushchenko. Supporters of Yushchenko gathered on the Independence Square in Kiev, reinforced by

opposition deputies and many lower-ranking officials. The internal division of Ukraine is illustrated by the

fact that as a response to these orange-clad demonstrators, counter-demonstrations were set up in the

East by Yanukovych followers, proclaiming that their Eastern region would declare autonomy if

Yushchenko was to become president. The tumultuous situation forced the parties into mediation, and on

November 27 the Ukrainian parliament stated that the elections had been fraudulent. The government

camp responded by stating that Yanukovych was to remain in power until the Supreme Court ruled the

election results valid. It was only in the second round of negotiations that an electoral law was amended in

order to make a re-run of the elections possible. In this re-run, Yushchenko won with 51,99% of the

votes, against 44,19% for Yanukovych (Turczyński, 2005, p. 73).

Viktor Yushchenko became the new President of Ukraine, promising radical economic and political

reforms in order to make Ukraine a democratic and transparent country with a well functioning market

economy, by reforming the judiciary, attacking corruption, establishing rule of law and creating

transparent business regulation (Wolowski, 2008, p. 25). In his augural address he stated: ‗Our place is in

the European Union‘ (qtd. in: Turczyński, 2005, p. 73). Meanwhile, the government was led by

Yanukovych, which led to a difficult period of cohabitation. This, according to Wolowski (2008, pp. 25-

26), worsened the legislative chaos in Ukraine, diminishing the public trust in the authorities as well as the

international image of Ukraine.

The elections in 2004 and the following Orange Revolution showed how troublesome the Ukrainian

democracy had become. According to Melnykovska (2008, p. 2), the protesters of the Orange Revolution

were unified in their bid to end the Kuchma era in politics, but lacked any consistent vision on what the

future of Ukraine should be. After having achieved the unifying goal of regime overthrow, the coalition

fell apart, bringing old habits of nepotism and corruption back to Ukrainian politics. Javier Solana stated

painfully at a conference on Ukraine in 2002 that ‗the course chosen by Ukraine will not move it closer to

integration with Europe‘ Turczyński, 2005, p. 56). This reluctant rhetoric did not change significantly in

27

the following years. Ukraine saw this as a clear rejection by Europe (Turczyński, 2005, p. 57). It removed

the sentence from its military doctrine which stated that EU and NATO membership were goals, and

instead articulated vague plans for ‗Euro-Atlantic cooperation‘ (Vahl, 2004, p. 1).

2.6. Ukrainian Politics after the Orange Revolution Five years after the Orange Revolution, Ukraine is a country with a troublesome economy, where

corruption is ubiquitous, business interests are vested and constitutional deadlock is pre-programmed

(‗Ukraine's Presidential Election: Oranges and lemons‘, 2010). According to The Economist (‗Ukraine's

Predicament: Oranges are not the only fruit‘, 2009), Ukraine‘s leaders ‗have squandered the credit they

won in the heyday of the Orange Revolution‘. This is illustrated by the tremendous fall in support for

Yushchenko, who was the hero of the Orange Revolution, but received only just over 5% of the total

votes in the elections in 2010. Voters have felt let down by Yushchenko and his Orange promises, as his

time in office had been one of continuous internal strife and ever-present corruption. Yanukovych won

the elections with 48,95% of the votes, compared to 45,47% of his main rival, Yulia Tymoschenko

(Central Election Commission of Ukraine, 2010). 8

2.7. The European Neighborhood Policy: Ukraine Ukraine was denied Associate Membership by the EU in Yalta in 2003. This time the EU did not offer

any timeline as to when membership would become an option (Kubicek, 2005, p. 280). The enlargement

round of 2004 thus meant a final blow to Ukrainian membership aspirations, sealing the border with

Poland and thereby causing a loss of income for many of the country‘s guest workers. In preparation for

the creation of the European Neighborhood Policy, the European Commission conducted research on

Ukraine in 2004, assessing the political and economic profile of Ukraine as well as assessing the

institutional infrastructure. This research was aimed at evaluating to what extent it was possible to deepen

relations with Ukraine (Tudorowski, 2009, p. 4). Although Ukraine seemed to be progressing towards a

democratic society, it still scored very badly with regard to media freedom and human rights. The

Ukrainian press was under political pressure, and Ukraine‘s minorities still suffered from racism and

discrimination (Tudorowski, 2009, p. 5). The ENP for Ukraine was agreed upon on December 9, 2004,

officially denying (for the foreseeable future) Ukraine‘s membership aspirations. Because of the strong

expression of commitment to reform made by Viktor Yushchenko and the hopeful Orange Revolution,

however, the EU decided to pursue an agenda aimed at increased cooperation, agreeing on an Action Plan

with Ukraine on February 21, 2005. Viktor Yanukovych, the Prime Minister of Ukraine at the time of the

adoption of the ENP Action Plan towards Ukraine, stated that Ukraine ‗had been ―humiliated‖ by the

8 Yulia Tymoschenko was a business tycoon before she entered politics. In the mid 1990s, she set up the United Energy Systems of Ukraine, making her, according to some estimates, one of the richest people in Ukraine. As she became involved in politics, she became part of Yushchenko‘s government in 1999 and served as prime minister during two administrations. As she was held in prison under the Kuchma presidency for a few months, charged with corruption, she became determined to remove Kuchma from the stage. She joined alliances with Yushchenko in his Orange Revolution, and paradoxically became known for fiercely attacking the oligarchs who gained their power during the Kuchma regime. In the presidential elections of 2010, she lost to Yanukovych, and was forced out of her position of prime minister (‗Profile: Yulia Tymoshenko‘, 2010).

28

EU‘s unwillingness to acknowledge its membership aspirations and that it would no longer seek an early

promise of membership prospects from the EU, but would focus on limited short-term agreements‘

(Vahl, 2004, p. 1).

2.7.1. The European Neighborhood Policy

Let‘s be clear about what the ENP is, and what it is not. It is not an Enlargement policy. It does

not close any doors to European countries that may at some future point wish to apply for

membership, but it does not provide a specific accession prospect either.

Benita Ferrero-Waldner, December 9, 20049

The ENP was created in 2004 in order to secure and strengthen stability, prosperity and security for the

EU and its neighbors, by promoting economic and political reform, the rule of law and democracy

(Linkevičius, 2003, p. 63). According to Sasse (2008, pp. 295-296), the ENP is the expression of a number

of security concerns of both the member states and the European Union as a whole. These concerns are

related to the wish for political stability, to counter negative implications of the recent Eastward

enlargement (whether they are perceived or real negative implications) for the ‗outsiders‘, as well as the

aim to create an alternative to Enlargement, while augmenting the notion of a common European foreign

policy. These security issues are aimed to be tackled with the promotion of good governance,

democratization and amplified trade and investment (Sasse, 2008, p. 296).

The ENP is the integration and expansion of existing instruments, rather than a new instrument.

Therefore, the ENP overlaps with existing EU agreements, such as the PCAs. The core element of the

ENP is the formulation of bilateral Action Plans, agreed between the EU and its respective partners.

These Action Plans map country-specific agendas and priorities for political and economic reforms, and

follow the Copenhagen criteria specifying conditions of democracy, a market economy and the aptitude to

take on the European acquis communautaire (European Commission, 2009b; Sasse, 2008, p. 302).

The ENP is not a legal contract on its own, but rather a set of ‗soft law‘ instruments which differ per

country. The Action Plans are the core of these soft law instruments, outlining a course of reform specific

per country. These Action plans are focused on the process, rather than on a stipulate end-goal, as they

promote approximation of the third country to EU standards (Lavenex, Lehmkuhl & Wichmann, 2009, p.

820).

As the above quote of Ferrero-Waldner suggests, the ENP is not aimed at enlargement, but is rather

aimed at creating a framework which enables the EU to export the same effect as the Enlargement policy,

namely promoting and encouraging democratic and economic reform, without offering the prospect of

membership (Linkevičius, 2003, p. 64). This makes the policy significantly different from the Enlargement

9 Benita Ferrero-Waldner is the former Commissioner for External Relations and European Neighborhood Policy and is currently the Commissioner for Trade.

29

policy, in which the prospect of EU membership has long served as the incentive for countries to

implement the painful reforms needed in order to acquire membership. Governments in the accession

process were able to use the ultimate goal of accession to maintain domestic support for their often

painful policy reforms. As Linkevičius (2003, p. 64) and Tudorowski (2009, p. 6) argue, by untying it from

Enlargement, the ENP has been focused on the process rather than on an end goal. Thereby, the ENP

loses a powerful incentive, which makes it significantly less attractive for its participants and a less

powerful tool for the EU in pressing for reform.

The ENP covers a wide range of issue areas in which cooperation takes place, such as trade, environment,

transport and energy. In order to implement the objectives as indicated in the Action Plans, the EU

provides technical and financial assistance through the European Neighborhood Policy Instrument,

replacing TACIS (European Commission, 2010c; Gänzle, 2008, p. 8).

2.7.2. The ENP towards Ukraine

The first Action Plan for Ukraine was agreed upon in February 2005. Table 2.1 provides a summary of the

main priorities of the ENP Action plan (European Commission, 2005)

Monitoring takes place at the end of each year, thereby providing room for evaluation and discussion.

This monitoring takes place on a bilateral basis (Melnykovska, 2008, p. 14). Ukraine has met some of its

Action Plan commitments as they were set in 2005, by, among other steps, holding free and fair elections

in (the second attempt of) 2004, cooperation in the EU border mission in Transdnietstria, signing a

cooperation memorandum on energy, and adjusting some of its legislation to the EU norms. Reform is

still needed, however, in the areas of administrative, economic and judicial reform, and the fight against

corruption (Grant, 2006, p. 54). As a response to this, the EU has opened the EU-Ukraine Association

Agenda in November 2009, with the aim of replacing the Action Plan for Ukraine with a new, more

extensive agreement which, according to the Commission (European Commission, 2010d) ‗will

significantly deepen Ukraine‘s political association and economic integration with the EU‘. In the

Strengthening democracy and the rule of law;

ensuring the democratic conduct of the 2004 and 2006 elections in accordance with OSCE standards;

ensuring respect for freedom of media and freedom of expression;

enhanced cooperation with regard to disarmament and nuclear proliferation;

enhanced cooperation in the field of security and border-issues, most notably in the region of Transdniestria and Moldova;

accession to the WTO;

gradual removal of restrictions and non-tariff barriers that impede bilateral trade;

gradual approximation of Ukrainian legislation, norms and standards with those of the European Union; further reinforcing administrative and judicial capacity.

Table 2.1 EU/Ukraine Action Plan priorities

30

Association Agenda (2009, p. 3), the following issues are prioritized:

Promoting further political association with Ukraine;

promoting further economic integration of Ukraine into the EU, mainly by the establishment of a

―deep and comprehensive‖ Free Trade Agreement;

the consolidation of democratic reforms (judiciary reforms, rule of law, fighting corruption).

2.7.3. The limitations of the ENP towards Ukraine

Despite the progress on fulfilling the commitments of the Action Plan, opinion on the appropriateness of

the ENP status of Ukraine remains varied. In the ENP, Ukraine is grouped with countries such as

Morocco that are geographically and politically far from qualified to ever become an EU member

(Kubicek, 2005, p.280). The approach of the ENP does not seem to recognize Ukraine‘s European

aspirations, and Ukraine accuses the EU of having double standards, as the EU set up the prospect for

future membership for the Central and Eastern European and Baltic countries, while it equally urged for

reform in Ukraine without offering this prospect (Gnedina, 2005, p. 18). According to Linkevičius (2003,

p. 68), this shows that the EU‘s policy towards Ukraine is ill conceived. Ukraine perceived the ENP status

as a painful rejection by the EU, as is illustrated by the harsh words of Yanukovych.

As a reaction to the ENP and in the absence of a genuine promise of EU membership, Ukraine seems to

be turning eastwards. Ukraine tightened its ties with the Commonwealth of Independent States in the East

in 2002. It furthermore fortified its relations with Russia in 2004 by concluding an economic agreement

creating the Single Economic Space, an agreement on the free movement of capital, goods and labor in

which Russia, Ukraine, Belarus and Kazakhstan are covered (Turczyński, 2005, p. 58).10 The

rapprochement with Russia is furthermore illustrated by the order of Ukrainian President Yanukovych on

April 5, 2010 to scrap the Ukrainian commission occupied with NATO membership, a commission set up

by his predecessor Yushchenko. This move could be regarded as a move towards Russia, as Russia has

long opposed Ukraine‘s NATO aspirations. According to Mikhailo Pashkov of the Razumkov Centre,11

‗the dialogue with Russia has become a more comfortable one‘, and president Yanukovych wants his

country to focus more on Russia than on the West (‗Ukraine's Yanukovich scraps NATO body‘, 2010).

There have been some conflicts between Russia and Ukraine, like the Tuzla island incident in 2004 and

the gas crisis of January 2009. In some parts of the country, the European choice still echoes. But despite

these conflicts, it appears as though Ukraine‘s course is currently turning towards the East.

10 Russia, Belarus and Kazachstan have agreed to create a Single Economic Space. For now, this economic integration includes the creation of common tariffs from January 1, 2010. It is planned that in July 2010, added to this will be a common customs space, complemented with an actual single economic space in 2012 (Vasudeva, 2010, online). The terms Single Economic Space and Common Economic Space are interchangeably used in the literature. In this research, the term Single Economic Space (SES) will be used. 11 The Razumkov Centre, a.k.a. The Ukrainian Centre for Economic and Political Studies (UCEPS) is a non-profit public organisation that carries out studies in different policy areas, such as domestic and foreign policy, military reform, energy policy and international and regional security.

31

This turn towards the East could be explained by looking at the limitations of the ENP towards Ukraine.

Scholars critical of the ENP (Wolczuk, 2008; Melnykovska, 2008) point out some of its weaknesses. As

indicated before, the concrete gain of accession is not incorporated in the ENP. According to

Melnykovska (2008), this gives the ENP ‗rewards‘ a long-term character, whereas its costs of reform and

implementation are short-term. Melnykovska furthermore criticizes the absence of sanctions. Wolczuk

(2008) also argues that the actual impact of the ENP on Ukraine has been relatively limited, in particular

because it has failed to mobilize Ukrainian politicians. For these politicians, the ENP is too vague and too

distant from Ukrainian politics, and they prefer to focus on domestic issues. For those Ukrainians who are

engaged in the European integration process, the ENP has been a disappointment, as pointed out earlier.

The ENP is, however, making a difference. As Wolczuk (2008, p. 88) argues, it is a chance for many

Ukrainians to prove their ―Europe worthiness‖, as the ENP Action Plan provides concrete policy goals

aimed at reform, providing guidelines as to which goals have to be reached in order to get closer to EU

integration. They see the ENP as a transitional framework on the road to future membership.

2.8. Ukraine’s positioning: does it have to choose? An important question for Ukraine is whether choosing for the Eastern vector, Russia, is in tension with

choosing for the Western vector, the EU. Why would a choice for the EU mean less of a choice for

Russia? The answer is rooted in both political and legal matters. It is impossible to integrate an assessment

of these complex legal matters in this research. Nevertheless, a few remarks can be made that might

provide an answer to the question whether Ukraine needs to choose.

Rule of law in Russia is exercised in a structure that is not compatible with European law enforcement.

Rooted in old Soviet structures, Russian law prevents the existence of a liberal and democratic legal

infrastructure. As Taylor (2006, p. 199) argues, ‗functionally and culturally Russian law enforcement

agencies are unlikely to be predisposed to partnership with liberal and democratic elements‘. This makes

the Russian legal system very incompatible with the European legal system as embodied in the acquis

communautaire. For Ukraine this means that further, extensive economic integration with Russia conflicts

with further economic integration with the EU. Ukraine‘s deals with Russia, especially those that are made

in the gas sector, take place ‗in the shadows‘, in a way that is incompatible with the regulations concerning

business competition in the EU. Examples are the corrupt ‗supply schemes‘ between Russia and Ukraine,

wherein Ukraine receives discounted Russian gas in exchange for Ukraine sharing its gas transit with

Gazprom (Socor, 2010, online). Not only are many of the Russian laws incompatible with the European

acquis, Ukraine itself is currently also not abiding by European legislative standards, notably concerning the

behavior of its big companies. An example is Naftohaz Ukrainy, a company that is so far removed from

European standards that it would cease to exist in its current form should Ukraine become an EU

member in the future (Global Witness, 2006). Additionally, as the regulations and standards with regard to

trade are highly complex and technical, it is desirable for Ukraine to converge with a single set of

economic standards. In sum, with regard to economic integration, Ukraine faces a clear choice, as

Emerson (2006, p. 57) puts it:

32

Ukraine faces a crucial choice: either to integrate more closely with the EU through a deep FTA

while seeking to maintain and extend the existing free trade agreements with CIS countries (for

example, by reducing the list of goods exempted from free trade); or it could opt for deeper SES

integration with its envisaged customs union and institutional provisions.

Further integration with the European Union furthermore requires Ukraine to make its political and

economic structure transparent and accountable. This means that further integration with Russia, with

Russia‘s current state of legal affairs, is incompatible with the required reforms and therefore inhibits

Ukraine from integrating further with the EU.

The fact that in the long-term, Ukraine will need to choose between integrating with the EU or integrating

with Russia (under the condition that Russia will not converge its legal system with that of the EU) does

not prevent Ukraine from steering a multi-vectored course in the short and medium-term, however. As

indicated in the above, the EU is keeping any promises with regard to possible Ukrainian EU membership

far at bay. As long as there is no clear perspective for membership for Ukraine, the country is able to

cooperate with and benefit from both neighbors in a pragmatic way. As Ukraine is not in the medium

term expected to completely integrate with the EU, it is still able to retain its nontransparent way of

conducting competition in the gas sector, for example. It is still be able to benefit from economic and

political integration with Russia, while keeping some of its promises to the EU. The fact remains,

however, that should Ukraine ever pursue complete integration with the EU, its integration with Russia

and its current legal and political system, will become impossible.

2.9. Conclusion This chapter has presented an overview of the historical background from 1991 onwards of Ukraine and

its relations with the European Union. It has shown how soon after independence, Ukraine already

articulated its desire of integrating with the EU. Although the EU had not been interested in Ukraine in

the two years just after its independence, the interest grew in the 1990s, resulting in a PCA agreement in

1994 and cooperation in different issue areas. While there was no specific agreement on Ukraine joining

the EU, the PCA and the Common Strategy were aimed at closer EU-Ukrainian cooperation, and were to

be the response to the European aspiration of Ukraine. Ukraine has, however, failed to move beyond

declaring it wants to become an EU member, towards actually designing and implementing policies aimed

at democratic and economic reform. The period of European embrace therefore cooled down, cumulating

in the European Neighborhood Policy towards Ukraine, wherein the prospect of membership is withheld

and replaced with Ukraine being a ‗mere neighbor‘.

The Orange Revolution and the subsequent election of Yushchenko as the new president of Ukraine

seemed to bring change to the country, promising radical economic and political reforms. Yushchenko

stated in his augural address that Ukraine was meant to be in the European Union. These reforms,

however, again failed to occur, as the coalition fell apart and Ukrainian politics fell back to habits of

corruption and nepotism. The limitations of the ENP in terms of providing incentives for reform, and the

33

long-term character of its rewards have had their implications for Ukrainian foreign policy. The ENP was

seen in Ukraine as a rejection by the EU, and the country has turned its focus towards the East, where

Russia has renewed its interest in Ukraine ever since the election of Vladimir Putin in 2000. President

Yanukovych, elected in January 2010, is the embodiment of this Russian focus. In April 2010, he dissolved

the Ukrainian commission occupied with negotiating NATO membership, a move wished for and

welcomed by Russia. Ukraine seems to be turning towards the East.

34

3. Theoretical Framework

This research aims to apply the liberal intergovernmentalist (LI) theory, as put forward most prominently

by Andrew Moravcsik from 1991 onwards, to the case of Ukrainian foreign policy. This chapter describes

the theoretical framework of liberal intergovernmentalism, which has been developed as a theory for

European integration. Although Ukraine is not a member of the EU, it is possible to apply the LI theory

because the framework is aimed to describe and explain foreign policy behavior of states involved in

European integration. Based on the liberal intergovernmentalist theory, an analytical framework will be

constructed which provides us with a step by step approach to applying the liberal intergovernmentalist

approach to the case at hand.

In the second part of this research, the empirical knowledge acquired by applying the liberal

intergovernmentalist approach will be used to analyze the European Neighborhood Policy towards

Ukraine. In order to do this systematically, a theoretical vocabulary developed by Lavenex and

Schimmelfennig (2009) will be used. These scholars define three modes of external governance the EU

can use: hierarchical, network and market governance. The second part of this chapter will elaborate on

these modes of external governance and how they will be used in this research.

3.1. Liberal intergovernmentalism: a response to neofunctionalism The theory of liberal intergovernmentalism emerged in international integration theory in the early nineties

as a response to one of the dominant models of European integration, neofunctionalism. When the Treaty

of Maastricht was signed in 1992, the European Community was the most significant example of

international policy-making coordination. Despite the urgent sense that European integration should be

addressed theoretically, International Relations (IR) scholars did not agree on how to explain this

phenomenon (Moravcsik, 1993, p. 473). An important theory had long been neo-functionalism, set forth

by Ernst Haas in his 1958 work The Uniting of Europe. According to Haas, European integration is a logical

consequence of previous European decisions to centralize regional governance. The essence of integration

therefore lies in the fact that is not the result of conscious choices but the product of previous integration.

Integration, according to Haas, starts in small steps initially and progresses further as economic interests

pressure governments to manage their economic interdependence through the centralization of policies

and institutions. This centralization leads to an integration that creates economic and political spillovers.

Although the concept of spillover has been the product of Ernest Haas‘ work on neofunctionalism, it has

been formally defined by Lindberg (1963, qtd. in Rosamond, 2005, p. 244) as referring to ‗a situation in

which a given action, related to a specific goal, creates a situation in which the original goal can be assured

only by taking further actions, which in turn create a further condition and a need for more action, and so

forth‘. The spillover argument holds that as political and institutions are created at the international level,

this generates pressures for further integration. Spillovers could be functional, as integration in certain

economic sectors propels integration in adjacent sectors. Political spillovers occur when through

35

cooperation in certain areas supranational actors are created with an interest in further cooperation. These

supranational actors are subsequently the major force in propelling regional integration further

(Moravcsik, 2005, pp. 351-353).

Moravcsik criticizes neofunctionalism and argues that European integration can be analyzed through an

intergovernmental perspective, with the EU being an ‗intergovernmental regime designed to manage

economic interdependence through negotiated policy co-ordination‘ (Moravcsik, 1993, p. 474). His main

critique of neofunctionalism targets its empirical weakness, as its predictions on the evolution of the EU

have been incorrect: There has not been a gradual and automatic process of European integration, as the

spillover argument would suggest. Instead, ‗the process of Community-building has proceeded in fits and

starts through a series of intergovernmental bargains‘ (Moravcsik, 1993, p. 476). Moravcsik argues that

neofunctionalism also bears theoretical flaws. According to the author, it is a framework, not a theory:

None of the claims is derived from common foundations and none of the claims implies the veracity of

the others (Moravcsik, 2005, p. 355). This makes empirical testing and improvement of the approach

difficult (Moravcsik, 1993, p. 476).

3.2. Liberal intergovernmentalism Liberal intergovernmentalism, as put forward by Moravcsik in 1993, is a new approach to European

integration based on general theories of international relations, such as Liberalism and Realism. These

general theories on international relations highlight the purposive choices of states and other social actors.

These theories, closely in line with mainstream theories on international political economy, assume that

state behavior reflects rational actions of governments, which are constrained by domestic societal

pressures at home, and by their strategic environment abroad (Moravcsik, 2005, p. 356; 1993, p. 474). In

his theory of liberal intergovernmentalism, Moravcsik stresses traditional concepts of national interests

and power, like the traditional IR approaches. A fundamental difference is, however, that liberal

intergovernmentalism ‗opens the black box‘ of the nation state, by arguing that the sources of these

national interests should be sought in domestic politics. In a nutshell, liberal intergovernmentalism

proposes the following process: ―States define preferences, then bargain to substantive agreements, and

finally create (or adjust) institutions to secure those outcomes in the face of future uncertainty‖

(Moravcsik & Schimmelfennig, 2009, pp. 68-69). Three essential assumptions stand at the core of liberal

intergovernmentalism: the assumption of rational state behavior, the liberal theory of national preference

formation, and an intergovernmentalist analysis of inter-state negotiations and interactions (Moravcsik,

1993, p. 480).

3.2.1. Rational state behavior

The assumption of rational state behavior implies that states calculate the utility of the available options

and choose arrangements that will maximize their utility. The outcome (further integration, or the

establishment of international institutions) thus can be explained as the collective outcome of

‗interdependent rational state choices and intergovernmental negotiations‘ (Moravcsik & Schimmelfennig,

36

2009, p. 68). One could look at the process of interstate bargaining as a process of supply and demand.

The product to be ‗bought‘ is policy, in a market place where demand is formed in a national preference

formation process. Governments attempt to negotiate their demands in the interstate bargaining arena.

The supply side consists of the possible political responses of the EU, as constructed by the process of

interstate strategic interaction, and thus emerges as a response to the demand.

The interaction between supply and demand shapes the foreign policy behavior of states (Moravcsik,

1993, p. 481). According to Moravcsik, the interaction between demand and supply is very important: One

should take into account both national preference formation and interstate bargaining when explaining a

certain outcome.

3.2.2. National preference formation The core of the liberal intergovernmentalist approach to national preference formation is that individuals

and groups of individuals formulate the national policy preferences. The concept of national preference

formation is liberal in origin. In the liberal argument, the most fundamental political actors are private

individuals and groups, interacting in a civil society. The decisive actors in the policy-making process are

naturally the state leaders and the national government. These actors are, however, ‗embedded in domestic

and transnational civil society, which decisively constrains their identities and purposes‘ (Moravcsik, 1993,

p. 483).

National interests, Moravcsik argues (1993, p. 481), emerge through domestic political conflict, in which

societal groups compete for political influence. In turn, foreign policy goals of national governments are

the product of the domestic bargaining process, and thus vary in response to shifting pressure from

domestic actors. Therefore, insight into the domestic politics of a country is a precondition for, rather

than a supplement to, the analysis of strategic interaction among states (Moravcsik & Schimmelfennig,

2009, p. 69).

The domestic preference formation process can be explained through the principle-agent model, as

Moravcsik (1994, p. 4) employs it. In this principal-agent model of domestic policymaking, the executive,

the head of state or the highest political authority, is the single agent, and societal groups are multiple

principles. Societal groups could be defined as being ‗any domestic constituency whose support may be

critical for the promulgation and implementation of policy‘ (Moravcsik, 1994, p. 4). This could be interest

groups, parties, civil servants, parliamentarians or individual citizens.

The principle and the agents interact in a continuing bargaining process, wherein domestic constituents

constrain the executive according to their relative bargaining power. Moravcsik (1994, pp. 4-5) argues that

in a democracy, domestic groups can pose two threats to the executive: the vetoing of specific policies or

the imposition of electoral or coalitional costs on executives, often ex post. They are constrained, however,

by two hurdles. The first is the access domestic groups must have to procedural instruments in order to

constrain the executives‘ policies. In order for the domestic groups to effectively veto or constrain certain

37

policy-decisions, domestic institutions have to enable the domestic constituents to effectively tie the hands

of the executives. The second obstacle is the knowledge barrier between the principle and the agent:

Domestic groups must be able to observe their executives in order to judge their actions. Societal control

could be constrained by insufficient monitoring. Not only between principle and agent, but equally among

the principles there could be information asymmetries. Those domestic constituents with good ties to the

government have access to a stream of information on diplomatic activities, whereas opposition groups

need to incur high costs to achieve and analyze this information (Moravcsik, 1994, p. 12).

Moravcsik (1994, p. 5) therefore argues that the relative bargaining power of the executives and the

domestic actors can be analyzed through their control over four domestic political resources, both

procedural and cognitive in nature. The first domestic political resource is initiative: the ability to set the

agenda for certain issues, in order to introduce or to block certain issues on the domestic agenda. The

second resource is also procedural in nature, the influence over institutions: the influence on legal

procedure by which domestic decisions are adopted and implemented. The third resource is cognitive,

namely the access to political and technical information. The fourth resource consists of ideas: the ability

to put forward legitimate justifications for specific policies, often ideological in nature. Three mechanisms

by which domestic actors can influence their executive and thereby national policy are by using sanctions,

positive or negative, by controlling procedures, and by negotiation (Moravcik, 1994, p. 5). National

interests thus ‗emerge through domestic political conflict as societal groups compete for political

influence, national and transnational coalitions form, and new policy alternatives are recognized by

governments‘ (Moravcsik, 1993, p. 481).

The policy making process is best explained by liberal intergovernmentalism in areas where preferences

are well-defined and certain, in societies where interests are institutionally organized and represented. The

weaker and more dispersed the domestic constituency behind a policy is, the less predictable the state

preferences are (Moravcsik & Schimmelfennig, 2009, p. 76). Moravcsik (1993) argues that in national

preference formation on issues of foreign policy, economic interdependence with other countries as well

as private economic interests are the primary determinants of national preferences. In most cases, the

rational choices made by national leaders are a response to constraints and opportunities stemming from

powerful economic constituents (Moravcsik, 1998, 18). In his most recent publications, however,

Moravcsik takes into account ideological concerns, which could play a stronger role in the preference

formation process, especially when economic interests are weak. He shares the argument with the

constructivist Schimmelfennig, who even argues that identities and norms are very likely to influence

substantive foreign policy outcomes if these norms and values are strongly entrenched in the domestic

sphere (Moravcsik & Schimmelfennig, 2009, p. 85).

Relevant for the analytical framework of this research is that to analyze the relative influence of domestic

actors on national policy, one thus has to look at what channels domestic actors have to influence the

initiation of policy (initiative); how they are able to influence domestic procedures, both constitutional and

38

statutory, according to which the policy-making process takes place (institutions); their ability to acquire

knowledge and to level out knowledge asymmetries (information); and the ability of domestic actors to

justify policies (ideas) (Moravcsik, 1994, pp. 5-6).

3.2.3. Intergovernmentalist analysis of interstate negotiations and interactions

The third assumption of liberal intergovernmentalism is the intergovernmentalist analysis of interstate

negotiations. Liberal intergovernmentalism combines domestic-based explanations with system-based

explanations for how governments act in international bargaining (Forster, 1998, p. 348). As mentioned

before, the liberal intergovernmentalist approach sees the response of the international community, in this

research the European Union and Russia, as the supply side of the interaction. This means that the supply

is the policy outcome which is the result of the bargaining process (Moravcsik, 1993, p. 481).

As the term ‗intergovernmentalism‘ implies, the liberal intergovernmentalist approach stresses the central

importance of power and interests in the international system. The difference to structural realist

approaches is that these interests are not merely dictated by the international system, but rather emerge

through domestic political conflict. The bargaining theory of liberal intergovernmentalism holds that states

achieve cooperation or coordination for mutual benefit, by collectively overcoming suboptimal outcomes.

The outcome of these negotiations depends on the relative bargaining power of the states involved in the

process. An important aspect of this bargaining process Moravcsik provides is that of asymmetrical

interdependence, ‗the uneven distribution of the benefits of a specific agreement and information about

preferences and agreement‘ (Moravcsik & Schimmelfennig, 2009, p. 71).

A second assumption of the intergovernmentalist analysis is that interstate bargaining takes place

according to the principle of lowest-common-denominator bargaining. More specifically, large states

exercise a de facto veto over changes in international cooperation, and therefore bargaining tends to

converge to the lowest common denominator of the large states‘ interests (Moravcsik, 1991, p. 25).

3.3. Critique of liberal intergovernmentalism

Liberal intergovernmentalism has been subject to critique. Some critique, like that of Donald Puchala

(1999, p. 320), focuses on a potential bias in the analysis, which, as Puchala argues, fits the world to the

analysis instead of adapting the analysis to the world. While Moravcsik‘s LI approach has been accused of

providing merely a series of ‗snapshots capturing isolated moments when ―grand bargains‖ were struck

among major EC Member States‘, one could, however, disagree, mainly due to the overwhelming evidence

Moravcsik provides in order to prove the applicability of his theory (Puchala, 1999, p. 326).

Anthony Forster, however, does seem to find a weak spot in the liberal intergovernmentalist approach.

His main critique focuses on Moravcsik‘s predictions about government behavior, in which he argues that

governments aggregate national preferences and formulate their foreign policy based on domestic

preferences. Forster (1999, p. 349) argues that although Moravcsik stresses the importance of preferences,

he still clings to neorealist concepts by asserting that governments calculate their national interests first

39

and thereafter present a united front in intergovernmental negotiations. Futhermore, Forster argues,

liberal intergovernmentalism assumes that domestic actors are able to formulate their preferences. Forster

provides us with examples drawn from the British Political Union negotiations in 1990-1. In these cases,

there were few interest groups who were able to make specific demands to their governments with regard

to their policy preferences. This inability to formulate demand was in part due to the lack of information

on what issues were exactly involved in these negotiations (Forster, 1998, p. 358). Forster furthermore

criticizes Moravcsik‘s assertion that constraints by interest groups on their governments are binding. He

asserts that in the cases he studied ‗the government was just as likely to impose its view on them rather

than vice versa‘ (Forster, 1998, p. 358). Moreover, according to Forster, it remains to be seen whether the

negotiation strategies of states are formulated after the domestic bargaining process. In the cases he

studied, policy options were continuously being redefined, based on shifting constraints, not only

domestic constraints, but also international pressures, political rivalries, the urge to sustain domestic

support and interfering departmental and organizational interests (Forster, 1998, p. 358). Moravcsik (2009,

p. 75) responds that we should resist exaggerating the relevance of these examples. The observations of

Forster might be relevant only in the short term. In the long run, these irregularities in the national

preference formation process will be overcome in favor of adapting national policy to the preferences of

the most powerful domestic interests.

The theory of liberal intergovernmentalism, nevertheless, remains a powerful theory, because rather than

despite its attempt to be a ‗grand theory‘, trying to explain European integration in its full breadth. It is a

theory that is a synthesis of theories and tries to explain integration as a phenomenon in which multiple

causes and factors interact with each other, on multiple levels of analysis. Liberal intergovernmentalism

links these multiple factors and theories into a single coherent approach (Morvacsik & Schimmelfennig,

2009, p. 68). Its strength is reflected in its ability to efficiently explain present-day European politics.

Liberal intergovernmentalism does not aim to explain what happens in the process of integration, but why

it happens (Puchala, 1999, p. 327). Integration is driven first and foremost by national leaders and

governments who respond to demands from their constituencies as well as to the world economy

(Puchala, 1999, p. 327). Despite its ‗rhetorical grandeur‘ even the Treaty of Lisbon remains, according to

Moravcsik (2009, p. 83) a conservative document, precisely because national governments still ‗call the

tune in European integration, pursuing diverse national interests, bargaining hard amongst themselves,

and institutionalizing integration to retain control‘ (Moravcsik & Schimmelfennig, 2009, pp. 83-4).

3.4. Applying liberal intergovernmentalism to the case

This research clarifies how Ukraine is positioning itself between its two poles of attraction: the EU and

Russia. The object of analysis therefore is Ukrainian foreign policy: how is it formed and what determines

Ukrainian foreign policy choices? The theory of liberal intergovernmentalism is a very suitable approach

to analyzing Ukrainian foreign policy, since it appropriately addresses the various factors that influence

policy-making in Ukraine.

40

As put forward in chapter 1, Ukraine‘s history shows that its foreign policy orientation has long been

determined to a large extent by a continuous domestic struggle, wherein multiple actors with wide-ranging

interests compete for influence on national policy. While domestic preferences stand at the basis of the

policy-making process in many countries, three particularities of Ukraine stand out which make the

country especially suitable for analyzing with the LI approach. First of all, the country knows a divided

identity, torn between Ukrainian-speaking pro-Europeans in the west and Russian speaking pro-Russians

in the east and south. This leads to different attitudes with regards to the direction of Ukrainian foreign

policy Secondly, the Ukrainian government is heavily dependent on Russia both politically and

economically. The strong ties with Russia this dependency creates are supported by many Ukrainians,

especially in the east and south. These constituencies are so strong that their voices are not easily ignored.

The third factor is that in Ukraine the military and business elites have a finger in the pie of domestic and

international politics (Nordberg, 1998, pp. 64, 85). These elites have wide-ranging opinions with regard to

their foreign policy preferences for Ukraine. Some Ukrainian businessmen favor stronger ties with the

EU, as EU integration could offer benefits such as market access that could improve the capitalist

development of the country and their own business position. Meanwhile, the Russian financial-industrial

conglomerates that penetrate the country favor Eastern-oriented foreign policy. The divergent agendas of

the different domestic actors make the domestic bargaining process a very complex and important aspect

of Ukraine‘s foreign-policymaking process, wherein multiple actors with wide-ranging interests compete

for influence on national policy.

This importance of domestic factors in the Ukrainian foreign policy-making process makes the country

suitable for studying through a liberal intergovernmentalist lens. This because, as mentioned before, liberal

intergovernmentalism explicitly takes domestic factors into account, by viewing the foreign policy goals of

a country as varying in response to shifting pressure from domestic interest groups (Moravcsik, 1993, p.

481). By making an assessment of the domestic interest groups competing for political influence, and the

national bargaining process of Ukraine, one is able to map the Ukrainian policy-making process, also on

foreign policy issues, which makes it possible to explain and predict Ukraine‘s positioning between East

and West. Liberal intergovernmentalism provides a step-by-step approach for analyzing how domestic

societal actors configure Ukrainian foreign policy preferences.

The analytical framework based on the theory of liberal intergovernmentalism and applied in this thesis is

shown in figure 3.1. Based on this framework we can determine the relations between domestic interest

groups, the national bargaining and preference formation process, and the effects this process has on

Ukrainian foreign policy. This is done via the following steps. First, after reviewing the literature on the

domestic actors involved in the political process in Ukraine, it is possible to indentify how domestic

political conflict in Ukraine takes place, which group(s) are most actively involved and which group(s)

influence this process most to which ends. These insights subsequently make it possible to assess how,

subsequent to the domestic bargaining process, national preferences are formed and are shaped by

41

governments into foreign policy goals. This is the first part of the theory of liberal intergovernmentalism,

that of national preference formation. The second part of the theory looks at intergovernmental

negotiations, in which the preferences formed at the national level are brought into the process of

strategic bargaining. These first two steps together show what the foreign policy goals of Ukraine are. This

is not the same, however, as what Ukraine can achieve in the international arena. As indicated in

paragraph 3.1.3., the third assumption of liberal intergovernmentalism is that negotiations on the

international level take place between states, in an interstate bargaining process in which states can be

asymmetrically interdependent. As the LI approach will be applied in this case, it is therefore important to

assess to what extent Ukraine is asymmetrically interdependent with the EU as well as with Russia, and

which pressures these interdependencies exert upon Ukraine. This will determine what Ukraine can get

out of the interstate negotiations.

In short, the liberal intergovernmentalist approach is applied by applying the steps of the analytical

framework as illustrated in figure 3.1 to the case at hand.

42

Features:

* act rationally

*economically interdependent

Interstate

negotiation

Foreign policy

goals

National

preferences National

bargaining process

Government/

executive

Substantive

outcome

States as actors

Domestic groups

and their foreign

policy preferences

Resources of relative bargaining power (§3.2.2):

* electoral power

* vetoing of specific policies

constraints:

* initiative/agenda setting

* influence over institutions

* political/technical information

Figure 3.1: Analytical Framework (Moravcsik, 1993; 1994; 2005; Moravcsik & Schimmelfennig 2009)

43

3.5. Modes of external governance

This research will try to define the mode of governance for EU-Ukraine relations, and look at whether

this mode of governance is appropriate for the case of Ukraine. In other words, is Europe approaching

Ukraine in the best possible way in order to reach its goals of economic and strategic cooperation? Is the

EU adequately dealing with the particular foreign policy formation process of Ukraine? As indicated in

chapter 2, the formal relationship with Ukraine is predominantly anchored in the ENP. The question to

be answered therefore is whether the ENP is attuned to the balancing act of Ukraine between East and

West, and whether the ENP takes Ukraine‘s national preference formation process into account.

In order to address these issues systematically, this analysis will be based on the theoretical vocabulary

offered by Lavenex and Schimmelfennig (2009). Lavenex and Schimmelfennig define governance as

‗institutionalized forms of co-ordinated action that aim at the production of collectively binding

agreements‘ (Lavenex & Schimmelfennig, 2009, p. 795). External governance takes place as parts of the

acquis communautaire are extended beyond EU borders to non-EU member states (Lavenex &

Schimmelfennig, 2009, p. 796). Lavenex and Schimmelfennig identify three basic modes of external

governance: hierarchical, network, and market governance. These modes of governance each have their

specific opportunities and constraints and range from hierarchical to horizontal, as will be further

explained below.

Categorizing EU external governance using the three modes of external governance provided by Lavenex

and Schimmelfennig is useful for analyzing European policy towards Ukraine for three reasons. Firstly, its

point of reference suits the object of analysis in this part of the research, the ENP, because the point of

reference of the external governance approach is not, as in LI, the unified state actor, but rather

institutional processes of norm diffusion and policy transfer (Lavenex & Schimmelfennig, 2009, p. 794).

In other words, it looks at systems of rules. This seems very suitable for analyzing EU-Ukraine relations in

the ENP, as the ENP can be seen as a set of rules and policies.

Secondly, the external governance approach suits the hybrid nature of the ENP. The ENP is inevitably a

form of EU foreign policy, as it is aimed at the European neighborhood. However, as Gänzle (2008, p. 4)

argues, the ENP is not foreign policy in the traditional sense: It is altogether different from, for example,

the European Common Foreign and Security Policy (CFSP). Some of the policies in the ENP resemble

more the EU‘s internal policies and rules, or are drawn from the enlargement policy. Lavenex and

Schimmelfennig (2009, p. 791) try to map this expansion of internal policies and rules beyond EU

borders with their notion of external governance. By using the external governance descriptions it is

possible to conceptualize the hybrid ENP policy of the EU, making it possible to analyze this specific

form of European integration that falls short of enlargement.

The third and final advantage of using the external governance descriptions provided by Lavenex and

Schimmelfennig is that this approach makes it possible to make predictions concerning the modes and

effects of EU external governance and to analyze whether a given mode is effective. Insights into the

44

effects of EU external governance in the form of the ENP towards Ukraine are valuable for this research

as it tries explicitly to assess the current ENP towards Ukraine and the effects this has on EU-Ukraine

relations. In short, the external governance descriptions provide a conceptual toolbox for analyzing the

ENP towards Ukraine.

3.6. Applying the external governance modes to the case Lavenex and Schimmelfennig (2009) assess under which conditions which mode of governance is most

effective. This research does not look at the conditions under which a certain mode of governance is most

effective, but looks at whether the current mode of external governance of the EU towards Ukraine, as

embodied in the ENP, is effective, and whether there is room for improvement. This requires to add an

additional step to the descriptions of Lavenex and Schimmelfennig, wherein I will explain which of the

modes of governance is in place in the ENP. This section will first describe the three modes of

governance as put forward by Lavenex and Schimmelfennig (2009) and subsequently will outline how the

ENP towards Ukraine will be categorized into one of these three modes.

3.6.1. Hierarchical governance

In hierarchical governance, the relations between the EU and third countries are formalized, and a formal

relation of domination and subordination exists. This makes the actor constellation in hierarchical

governance vertical. This relation is institutionalized in binding formal prescriptions, precise rules and

procedures and extensive use of monitoring and sanctioning. Hierarchical governance thus is formal and

precise, and the relationship between the EU and third countries is clearly asymmetric (Lavenex &

Schimmelfennig, 2009, pp. 797).

According to Lavenex and Schimmelfennig (2009, p. 797), the ENP could be seen as an example of

hierarchical governance of the EU in third countries. The EU often sets conditionalities that bind the

country to abide by certain rules in order to take part in the ENP, or in order to achieve EU assistance.

This makes the adoption and implementation of EU rules in third countries in hierarchical governance

one of harmonization with the EU rules and regulations. The effective use of these conditionalities

depends to a large extent on the precision of the rules and regulations that define the conditionalities as a

‗mode of top-down policy transfer‘. Some elements of the ENP, however, Lavenex and Schimmelfennig

argue, fit more properly into the next mode: network governance (Lavenex & Schimmelfennig, 2009, p.

797).

3.6.2. Network governance

In network governance, the actors are formally equal, which makes the constellation of actors horizontal.

Power relations are often symmetric. In practice, however, power asymmetries can exist. These networks

are constructed based on mutual agreement. There is no extensive jurisdiction but rather voluntary

agreement and cooperation in certain sectors, in a framework in which actors are capable of policy

making, but without legislating. The degree of institutionalization is medium-tight, partly formal and partly

informal. Applied to external governance, Lavenex and Schimmelfennig maintain that the network mode

45

of governance is reflected in the EU in the institutionalized system of continuous horizontal co-ordination

of rules. This co-ordination is promoted by shared institutions. ENP could also fall under this category:

Especially the joint development of the Action Plans is an example of horizontal cooperation (Lavenex &

Schimmelfennig, 2009, pp. 797-8).

As network governance is based on voluntary cooperation, and is usually more oriented towards process

and expertise sharing than political affiliation, network governance is a fruitful form of EU external

governance. As Schimmelfennig and Sedelmeier (2005) point out: ‗Network qualities such as deliberative

processes, co-ownership, and density of interaction are likely to enhance the legitimacy of rules and are

thus conducive to their expansion‘(qtd. in: Lavenex & Schimmelfennig, 2009, p. 798). However, since

tight rules and regulation are often absent in this specific mode, it does leave room for maneuvering for

the negotiating parties, which could make reaching real agreements difficult.

3.6.3. Market governance

The third form of governance is market governance, in which policy outcomes are the result of

competition between formally independent actors, whereas in the previous two types of external

governance the outcomes are the result of hierarchical harmonization or networked co-ordination. Market

governance is in place when there is significant market integration between the EU and the third

countries, without the existence of a dominant actor (Lavenex & Schimmelfennig, 2009, pp. 799-800).

Because of the absence of rules and an overarching authority which characterizes the market system, this

mode of governance is largely neglected in political science literature. Lavenex and Schimmelfennig (2009,

p. 799) include this form of governance as it is becoming an institutionalized form of political interaction

between the EU and third countries. The constellation of actors again is very much horizontal, with a very

loose and informal institutionalization.

The system of market governance is based on the principle of a harmonization of interests. The

harmonization of interests emerges because of the costs of non-compliance: Ignoring or violating the EU

rules leads to opportunity costs, for example when a country does not abide by EU standards for

producing meat, its meat cannot be exported to the EU. In order to prevent this potential loss of income,

states will find that it is in their interest to abide by the EU rules. States thus harmonize with the EU rules

without being forced to do so. This harmonization of interests could thus result in a de facto harmonization

of legislation. This mode of governance is most applicable to European internal market and competition

policies, for example the European customs union with Turkey created in 1995, because the opportunity

costs that lead to a harmonization of regulations are primarily important in the economic sphere (Lavenex

& Schimmelfennig, 2009, p. 799).

3.6.4. Identifying mode of governance

Before the effectiveness of a certain mode of governance can be analyzed, we need to identify the mode

of governance used by the EU in the ENP towards Ukraine. Lavenex and Schimmelfennig do not provide

a way of categorizing EU external governance using these three modes. Therefore, this research will use

46

their work to set up indicators that explain how we can tell which mode of governance is in place in what

situation, which enables me to discuss the implications of that mode and primarily how it fits with the

insights obtained in the empirical part of this research. In their explanation of the three modes of

governance, Lavenex and Schimmelfennig (2009, p. 800) provide three primary indicators which can show

which mode of governance is in place in the relationship between the EU and Ukraine: (1) actor

constellation, (2) the degree of institutionalization and (3) the mechanism of rule expansion, i.e. the

adoption and implementation of EU rules and regulations. This research adds a fourth indicator: the

relations of power and interdependence between the EU and Ukraine, taking the political context of EU-

Russia and Ukraine-Russia relations into account. This indicator is not included by Lavenex and

Schimmelfennig in their summary of modes of external governance. The reason why it is added to the

indicators in this research is that the ENP, subject of analysis in the second part of this research, does not

exist in a political vacuum: The effectiveness of the ENP towards Ukraine cannot be measured without

looking at the broader geographical and historical context of Ukraine‘s foreign policymaking. Especially

because this research looks at Ukraine‘s positioning between the Eastern vector, Russia, and the Western

vector, the EU, it is important to look at the broader political context of relations between the EU,

Ukraine and Russia.

Actor constellation

The first indicator that will be assessed is the constellation of actors. In the hierarchical mode of

governance, the constellation of actors is primarily vertical. In the other two modes of governance,

network governance and market governance, the constellation of actors is primarily horizontal (Lavenex &

Schimmelfennig, 2009, p. 800). The first indicator thus compels us to assess to what extent the

relationship between the EU is horizontal or vertical.

Degree of institutionalization

The second indicator is the degree of institutionalization. In the hierarchical mode of governance, the

ENP would be highly institutionalized, with tight and formal rules. Governance is exerted in the form of

legislation, by defining authoritative and enforceable rules for Ukraine to abide by, and providing room for

sanctioning the country should it not abide by the EU rules (Lavenex & Schimmelfennig, 2009, p. 797). In

network governance, the degree of institutionalization would be medium-tight, wherein rules would be

both formal and informal. The laws are less binding than in the hierarchical forms of governance, and are

based on mutual agreement. In market governance, the degree of institutionalization of the EU-Ukraine

relationship in the ENP would be loose and informal. The second indicator for the modes of governance

therefore compels us to assess the degree and formality/informality of institutionalization of EU-Ukraine

relations.

Mechanism of rule expansion

47

As the third indicator Lavenex and Schimmelfennig identify the mechanism of rule expansion, or, in other

words, the adoption and implementation of EU rules and regulation in Ukraine. The hierarchical mode of

governance would tend to a complete harmonization of Ukraine‘s rules with those of the EU. The

network mode of governance would lean towards policy co-ordination based on mutual agreement,

bargaining and discussion. The market mode of governance foresees an approximation of legislation

between the EU and Ukraine, not because this is agreed upon but because both countries benefit from

regulatory adaptations of each other‘s rules and standards (because of the proposed benefits of trade this

would imply) (Lavenex & Schimmelfennig, 2009, p. 797-799). In order to indicate which mode of

governance is in place, it is necessary to assess to how the ENP has been agreed upon between the EU

and Ukraine, and to what extent the ENP embodies purely EU rules and regulation, or is the product of

more horizontal policy co-ordination based on mutual agreement or interests.

Power relations and interdependence

The final indicator is that of power relations and interdependence between the EU and Ukraine, taking

into account the political context of EU-Russia and Ukraine-Russia relations. While Lavenex and

Schimmelfennig do not use this fourth indicator in describing the three different modes of governance,

they do analyze under which conditions of EU external governance which mode is most effective. One of

the explanations they use is the power-based explanation (2009, p. 803). This explanation suggests that

‗external governance is determined by the EU‘s power and its interdependence with regard to third

countries as well as competing ‗governance providers‘ in its neighbourhood and at the global level‘

(Lavenex & Schimmelfennig, 2009, p. 803). The fourth indicator is derived from this power-based

explanation and looks at the (a)symmetry of power and the levels of interdependence between the EU,

Ukraine and Russia. Should the power relation between the EU and Ukraine be highly asymmetric, with

Ukraine being very dependent on the EU (and not on Russia), this would indicate a hierarchical mode of

governance, because Ukraine in that case would be very dependent on the EU, without having an

alternative to turn to, which would enable the EU to enforce rules and regulations on Ukraine. Should

Ukraine, however, have the option of an alternative ‗governance provider‘, Russia in this case, the EU

could not afford to enforce its rules and regulations too harshly. The relations between the EU and

Ukraine would then be more symmetric. Of course it could be possible that Ukraine‘s relations with the

EU and Russia are of a different nature than EU-Russia relations. The most likely scenario would be that

EU and Russia are both powerful, and that Ukraine is considerably weaker than both the EU and Russia.

In that case, it would be necessary to see to what extent Russia can act as an alternative governance

provider to the EU in the ENP towards Ukraine. What alternatives can it offer Ukraine? If the relations

between Ukraine, the EU and Russia would be symmetric, this would indicate a network mode of

governance, as no country would be in the position to impose its will on the others. Market governance

would be most likely if interdependence between the three countries would be very high and symmetric,

48

with no dominant governance provider between the three (Lavenex & Schimmelfennig, 2009, pp. 803-

804).

Summarized, the indicators to show which mode of governance is in place are as follows:

Mode of governance Indicator

Hierarchic Network Market

Actor constellation Vertical Horizontal Horizontal

Degree of institutionalization

Tight and formal Medium-tight, both formal and informal

Loose and informal

Mechanism of rule expansion

Harmonization Co-ordination Competition

Power and interdependence relations

Ukraine strongly dependent on EU, asymmetric power relation. No significant role for Russia.

Symmetric power relation EU-Ukraine-Russia.

Significant market integration without dominant power.

In this research, the ENP towards Ukraine will be scrutinized based on these four indicators as derived

from Lavenex and Schimmelfennig (2009).

3.7. Conclusion The theoretical framework provided by liberal intergovernmentalism can be summarized in figure 3.1,

which shows how domestic actors configure foreign policy through the process of domestic bargaining

and national preference formation.

It has been asserted that the institutional choices that have led to European integration are the result of a

three-step process: First domestic actors form preferences in a process of domestic bargaining, then states

aggregate preferences and proceed to interstate bargaining in the European arena, and finally states choose

institutional arrangements that maximize their preferences (Jupille & Caporaso, 1999, p. 435). Domestic

actors, private individuals or groups with autonomous interests, are thereby the most fundamental actors

in national politics, in which the purposes of national leaders are embedded. National governments

respond to demands from these national constituencies in shaping national policy. Therefore, Moravcsik

argues, ‗the most fundamental influences on foreign policy are the identity of important societal groups,

the nature of their interests, and their relative influence on domestic policy‘ (1993, p. 483).

Futhermore, this chapter has introduced three modes of external governance as put forward by Lavenex

and Schimmelfennig (2009): hierarchical governance, network governance and market governance. These

49

modes of governance can be used to analyze which type the European Union employs in its relationship

with Ukraine, embodied in the ENP for Ukraine.

50

4. Domestic actors and their foreign policy preferences

As indicated before, two contrasting groups exist in Ukrainian society: eastern and western Ukrainians.

While some Ukrainians are, according to Riabchuk (2007, p. 79), predominantly anti-communist and favor

radical economic reforms, private ownership, the revival of the Ukrainian cultural legacy and eventually

even EU membership, the others rather see Ukraine integrated with Russia and Belarus, granting the

Russian language the status of state language in Ukraine, and are in favor of consolidating the ties with

Russia (Riabchuk, 2007, p. 79). Riabchuk argues that this societal ambivalence results from societal

commitment to opposite and incompatible views and values, a phenomenon which typically surfaces

during transition periods. Paradoxically, however, the east-west division depicted above is not as clear-cut

as it may seem. According to Riabchuk (2007, pp. 79-80), the ‗two Ukraines‘ rather overlap and fuse,

permeating each other. Many Ukrainian regions are highly heterogeneously populated, and individual

Ukrainians themselves ‗can be very ambivalent about their ideological preferences, orientations and

thereby vague and nebulous concerning their identity‘ (Riabchuk, 2007, p. 80).

According to the Dzserkalo Tyzhdnia poll of September 26, 2002 (cited in: Chudowsky & Kuzio, 2003, p.

276), 90–92% of the Ukrainians believed they had no influence whatsoever on local or central authorities.

This ‗collective neurosis‘, as Riabcuk (2007, p. 81) puts it, makes it possible for the elite to have a free

hand in the policy formation process (Wolczuk, 2004, p. 9). But even this elite is divided in their interests,

as will be explained below. Therefore, an inability for collective action emerged in Ukraine after

independence, according to Zimmer (2006, p. 277), due to the fact that the different elite groups in

Ukraine had different perspectives on the future of the newly independent Ukraine. Additionally, the

liberalization of the economy led to new opportunities of enrichment and to a culture of rent-seeking

among a large share of the elite, which pulled their attention away from creating a healthy political and

institutional framework for the country (Zimmer, 2006, p. 278). The ‗collective neurosis‘ that Ukraine has

suffered from due to these reasons is also reflected in Ukraine‘s foreign policy preferences, which have

been very variable in the period after independence.

As argued in Chapter 3, the core of the liberal intergovernmentalist approach to national preference

formation is that individuals and groups of individuals formulate national policy preferences. This is

derived from the liberal assertion that individuals and groups interacting in a civil society are the most

fundamental political actors in national preference formation. Domestic societal groups are defined by

Moravcsik as being ‗any domestic constituency whose support may be critical for the promulgation and

implementation of policy‘ (Moravcsik, 1994, p. 4). National interests emerge through domestic political

conflict, wherein different societal groups compete for political influence. In the domestic conflict,

coalitions (national and transnational) may form. Governments eventually aggregate and recognize policy

options. To understand the foreign policy behavior of states, it is crucial to understand the nature of

domestic politics. This chapter provides an outline of the main domestic actors and their foreign policy

51

preferences in the context of the domestic political framework. This chapter will not provide an overview

of all significant actors in the political arena of Ukraine in general. Because the focus of this research is

national preference formation regarding foreign policy preferences, this chapter will focus on only on

those actors in the domestic arena that are actually concerned with and involved in the bargaining process

with regard to foreign policy preferences.

While it is important to have a good overview of the formal political and institutional make-up of Ukraine,

it is also important to note that by merely looking at formal institutions and their formal relations, one

fails to capture the essence of the Ukrainian domestic preference formation process, because a share of

the Ukrainian domestic bargaining process takes place in the shadow of the formal political and

institutional framework. Ukraine‘s political situation can be labeled as ‗feckless pluralism‘: This means that

Ukraine is ‗characterized by a significant degree of political freedom, regular elections and changes of

power between distinct political groupings. Nevertheless, democracy remains superficial‘ (Melnykovska,

2008, p. 8; Zimmer, 2006, p. 282). Ukrainian politics is permeated by informal political processes that have

a significant role in the domestic bargaining process and is, according to Zimmer (2006, p. 284),

characterized by a formal, but not factual separation of the private and public spheres. This is can be

called ‗neo-patrimonialism‘: ‗the co-existence and mutual penetration of patrimonial and legal-rational

bureaucratic elements in a densely intertwined structure, where the patrimonial logic is encrypted into the

formal institutions‘ (Zimmer, 2006, p. 284). Behavior in the political arena is to a large extent based on

personal relations. Loyalty is based on common interests. In sum: political rule in Ukraine is exercised

within a formal structure and ‗with the claim to rational-procedural bureaucracy and modern statehood‘,

while the political and legal systems are permeated by a patrimonial system of personalized rule, ‗based on

loyalties and material incentives and rewards‘ (Zimmer, 2006, pp. 284-285). In order to properly

understand how the process of domestic bargaining and preference formation takes place in Ukraine,

therefore, this chapter will also focus on the political process below the formal surface, in other words the

more informal and obscure aspects of Ukrainian politics.

Ukrainian government is organized around four administrative levels, each with their own governing

body. The levels and bodies are shown in table 4.1.

Level Highest political body

National level Verkhovna Rada

Oblast level (24 provinces) + the Autonomous Republic of

Crimea, Kiev and Sevastopol

Oblast‘ Rada

Raion Level (Oblasts are divided into up to 27 raions) Raion Rada

City level (Raions are divided into towns and villages, larger cities

have the same status as raions)

City Rada

Table 4.1 Administrative units on four levels in Ukraine

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This research focuses on the process of domestic preference formation with regard to foreign policy, and

therefore prioritizes the national level, as the lower administrative units are predominantly occupied with

national policies and politics, and not with foreign policy-making. An overview of the political and

institutional make-up of Ukraine is shown in figure 4.1. This figure shows the basic political and

institutional framework wherein the process of national bargaining and preference formation takes place.

In the following section, the core actors in the Ukrainian domestic bargaining process shown in figure 4.1

are elaborated.

53

Figure 4.1: Political and institutional infrastructure of Ukraine

54

4.1. Presidency and presidential administration As explained in Chapter 1, Ukraine has a semi-presidential system. In essence, this means that the

president is elected by universal suffrage, possesses considerable executive powers but is constrained by a

prime minister and cabinet who possess executive and governmental powers. The parliament in turn has

the power of impeachment of the president. In 1999, president Kuchma took direct control of the ‗power

ministries‘: defense, internal and foreign affairs, the security services of Ukraine, energy and information

(Zimmer, 2006, p. 279). The other ministries are under direct control of the prime minister.

An additional forum in which the president of Ukraine operates is the presidential administration. This

administration has the aim of facilitating cooperation between the president and the government and

parliament. During the Kuchma era of politics, however, the presidential administration was made more

powerful by presidential decree: Kuchma ordered that all executive bodies and personnel should execute

orders given by the head of the presidential administration and his deputies (Zimmer, 2006, p. 281). The

presidential administration is, after the president, the second centre of executive power of Ukraine,

wherein many of the major policy decisions are taken. The current head of the presidential administration

is Sergei Levochkin, who is linked to the oligarchic group the Industrial Union of Donbass (ISD).

Levochkin has close ties with the gas lobby of Ukraine, which were formed in the period when he was

senior advisor to president Kuchma (Kuzio, 2010, p. 1). More on the ISD and its foreign policy

preferences is found in section 4.8 (Protsyk, 2003b, p. 1085).

The role of the presidency changed significantly during Kuchma‘s era in office. According to Protsyk

(2003b, p. 1087), Kuchma‘s ruling era was marked by persistent attempts on the part of the president and

the presidential administration to expand the formal powers of the president. The president was able to

use his constitutional powers and his executive government to implement some significant constitutional

changes. He has come ‗to overshadow other branches of power (legislature, judicial and regional

governments), and neutralize most efforts at introducing effective ―checks and balances‖‘ (Wolczuk, 2004,

p. 3). In a bill passed by parliament on January 12, 2007, some changes were made to the powers of the

president, making it, for example, possible to countersign presidential decrees. Nevertheless, the powers

of the president remain significant, amongst other reasons due to the president‘s control over the power

ministries, as well as his power over the National Security and Defense Council (see paragraph 4.4) and

the presidential administration.

During the presidency of Viktor Yushchenko, Ukrainian foreign policy was tilted towards the West, with

Yushchenko repeatedly stressing the need to integrate further with the EU and NATO. Meanwhile

Yushchenko stressed, however, that deepening the relations with the West did not mean that this would

hurt Ukraine‘s ties with Russia (Freire, 2009, p. 238). The current president of Ukraine is Viktor

Yanukovych, who is the leader of the Party of Regions. Yanukovych has staged a comeback after the

Orange Revolution of 2004, after which he had to step down as president due to the fact that his election

victory was fraudulent and annulled by the Supreme Court. With a 3.48 percentage point margin of victory

55

he managed to outrun his main opponent in the 2010 elections, Yulia Tymoshenko (‗Profile Viktor

Yanukovych‘, 2010).

As an important member of the eastern Donetsk clan (to be elaborated in section 4.8), Yanukovych is

often profiled as being pro-Russian. Before becoming a president in 2010, Yanukovych had been prime-

minister twice under the Yushchenko presidency. This resulted in a shift towards privileged relations with

Moscow. Putin‘s support for Yanukovych during the 2004 elections, even when the elections seemed to

have taken a fraudulent turn, reinforced this image of Yanukovych being a ‗puppet of Russia‘ (Freire,

2009, p. 236). Amongst others measures the abolishment of Ukraine‘s NATO integration committee, his

support for the Russian plan to create a post-NATO European Security Treaty and the recent signing of

an agreement which let the Russian navy keep its base in Sevastopol until 2042 were seen as significant

pro-Russian gestures (Reitman, 2010, online). It is important to note, however, that Yanukovych let the

Russian Black Sea Fleet remain in the Crimean Sea in exchange for cuts in gas prices. This deal will save

Ukraine an estimated $40 billion on gas imports over the next decades. This in turn can not only help to

improve Ukrainian living standards, but could help ensure a new agreement with the IMF, leading to a

multi-billion dollar credit line. Moreover, an improvement of the Ukrainian budget could also bring into

closer reach the signing of an Association Agreement with the European Union (‗Give Yanukovych the

Credit He‘s Due‘, 2010).

Meanwhile, the Kremlin has reacted assertively to this pro-Russian orientation of the Yanukovych

government, exploiting the variability in Ukrainian politics by getting involved in Ukrainian domestic

affairs by taking steps aimed at integrating the Russian and Ukrainian economy (Freire, 2009, p. 245).

Nevertheless, it is difficult to argue that Yanukovych has an eye only for the eastern vector. During his

time as prime minister, Yanukovych argued that the EU was a strategic goal for Ukraine (Freire, 2009, p.

242). On several occasions Yanukovych confirmed that he is committed to a balanced policy. In his

inaugural address on February, 25, 2010, he stated:

Being a bridge between East and West, an integral part of Europe and the former Soviet Union at

the same time, Ukraine will choose a foreign policy that will allow our country to get the most out

of the development of equal and mutually beneficial relations with Russia, the European Union,

the United States and other countries that influence development in the world.

President Viktor Yanukovych's address to the Verkhovna Rada of Ukraine, 2010

So while overtly, Yanukovych may be seen as a proponent of the ‗ Russian project‘, amongst other reasons

due to his relations with the Kremlin, his background in the Donetsk clan and his statements, one cannot

conclude that Yanukovych is following a merely pro-Russian course. Yanukovych has, according to Freire

(2009, p. 239), ‗immediately noticed the relevance of the European vector in the country‘s foreign policy,

showing his intention not to simply bow before Russia‘. A possible reason for the ambivalence in

Yanukovych‘s political position is the internal division in his Party of Regions between the business

56

fraction and the political fraction. The nature and consequences of this division will be elaborated in

section 4.6.1.

In sum, under the current president Yanukovych relations with Russia are tight, not least because of the

Ukrainian dependence on Russian resources and commercial relations with Russia. Because of the

assertive position of the Russian government with regard to Yanukovych‘s favoring the eastern vector,

Freire (2009, p. 245) argues that Ukraine has been pulled away from Brussels towards Moscow.

Nevertheless, Yanukovych has demonstrated that he is not interested at all in turning away from Europe

altogether. He declared in March 2010 that European integration was a strategic goal for Ukraine, and

stated that Ukraine had a significant role as a bridge between East and West. A symbolic act was his first

visit after his inauguration, which was to Brussels, and not to Moscow. The pro-Russian orientation of

Yanukovych, thus, does not result in a single-vector vision on foreign policy. To fully understand the

policy preferences of Yanukovych, it is important to have insight into Yanukovych‘s background in the

Donetsk clan and the foreign policy preferences of this group. This will be elaborated in section 4.8.

4.2. Prime minister The prime minister is part of the dual executive in semi-presidential Ukraine, alongside the president. The

prime minister is nominated by the president, but has to be approved by the parliament before he or she

can take office (Protskyk, 2003, p. 1078). Under direct control of the prime minister are the ministries of

transport, social protection, emergency situations, ecology and environmental protection, the division of

energy, transport and related matters. Under the prime minister furthermore are gathered three vice prime

ministers, of economy, agriculture and humanitarian affairs.

The role of the prime minister has been augmented after the Orange Revolution and the subsequent

constitutional changes of 2006. Under the 1996 constitution the prime minister needed to seek the

approval of the president before he could appoint ministers. Furthermore, the ministers could be

dismissed by the president. This led to a situation in which the president was in effective control over the

prime minister and the cabinet. Under the 2006 constitution, the relationship between prime minister,

president and parliament is more balanced. The parliament must approve the ministers (although not

those under direct presidential control, seen in figure 4.1), and may dismiss them. Moreover, the prime

minister has been placed under parliamentary control (D‘Anieri, 2005, p. 86).

The current prime minister of Ukraine is Mykola Azarov, member of the Party of Regions. Azarov is

described by Szeptycki (2008, pp. 45-46) as being one of the older and more radical representatives of the

Donetsk clan, favoring rapprochement with Russia. Azarov is Russian-born and has spent six years

heading the state tax administration. During this time, Azarov is known to have plunged himself into

financial embezzlement and corruption (Feifer, 2010). Azarov, who is not able to speak Ukrainian, is one

of Yanukovych‘s biggest allies. Under the 2006-2007 Yanukovych government, Azarov was vice prime

minister, and under his auspices were the issues related to European integration. Later on, during his time

as minister of finance, Azarov had the bureaucratic powers to implement the economic reforms the EU

57

wanted from Ukraine. He remained, however, according to Melnykovska (2008, p. 6), passive with regard

to compliance with EU rules and regulations, due to his favor for the Russian vector in foreign policy.

Azarov is strongly in favor of Ukraine integrating more closely with the CIS and the Single Economic

Space, in which Russia, Belarus and Kazachstan are also included. His pro-Russian orientation has been

reaffirmed by his visit on March 25 2010 (two weeks after being appointed) to the Russian prime minister

Putin, asking him ‗to forget everything that happened between Ukraine and Russia in the past five years,

starting again from zero‘ (‗Азаров попросил Путина забыть все‘, 2010).

4.3. The Ministries and the bureaucracy Within the political arena of Ukraine, a role in the positioning between East and West is played by the

ministries and their respective bureaucracies. The Ministry of Foreign Affairs (MFA) has traditionally been

one of the most pro-European institutions of Ukraine, and is ideologically committed to European

integration of Ukraine (Melnykovska, 2008, p. 7; Bibermann, 2009, p. 5). This pro-Western orientation is

partly due to the personnel recruitment system, which requires candidates to be able to write in Ukrainian,

something that precluded many eastern Ukrainian candidates. The MFA bureaucracy therefore consists of

many pro-European officials (Biberman, 2009, p. 4; Wolczuk, 2004, p. 14). The institutional make-up of

Ukraine makes the MFA, however, relatively weak in the foreign policy-making process. Since Kuchma

took control over the power ministries in 1999, the MFA is directly responsible to the president.

Moreover, constitutional amendments of the last years have racked many foreign policy formulation

powers over to the National Security and Defense Council (NSDC, see 4.4) and the presidential

administration. This makes the relative influence of the MFA on the formulation of foreign policy weaker

than that of the presidency, the presidential administration and the NSDC. This weak MFA as compared

to the executive is a legacy of Soviet times, when foreign policy was ‗directed from the center‘

(Melnykovska, 2008, p. 7). Biberman (2009, p. 3) puts the problem as such:

The relationship between the Foreign Ministry and the leading domestic political institutions that

formulate and influence Ukrainian foreign policy is generally nontransparent, dynamic, and often

influenced by such factors as partisan constellations, idiosyncrasies of individual leaders, informal

inner circles, and economic and security conditions.

So despite its ideological commitments to stronger EU integration, the MFA does not have the autonomy

to coordinate Ukrainian foreign policy towards the EU. Despite its frequent attempts to bring Ukraine

closer to the EU, the hands of the MFA are tied by the executive.

The Ministry of Economy and European Integration (MEEI) has a more pragmatic approach to

European integration, interested first and foremost in access to European markets. Membership of the

WTO was one of its main priorities, but since 2005, the MEEI is actively pursuing reforms in Action Plan

areas (Melnykovska, 2008, p. 7). The Ministry of Justice is also taking steps towards EU integration by

harmonizing Ukrainian legislation with the EU, and has set up a State Department for Legal

58

Approximation (SDLA) to work out further the legal harmonization with EU rules and regulations

(Wolzcuk, 2004, p. 14; Melnykovska, 2008, p. 7).

A problem is that within the bureaucratic system of Ukraine, new administrative units occupied with

European integration are set up almost simultaneously, which often results in inconsistent policy. For

example, the name of the Ministry of Economy was changed to Ministry of Economy and European

Integration, while a department concerned with European integration was created at the same time within

the MFA. Moreover, president Kuchma ordered by presidential decree in 2003 to set up a State Council

for European and Euro-Atlantic Integration, which was supposed to coordinate Ukraine‘s political, legal,

economic and security integration with the EU and NATO (Wolczuk, 2004, p. 14). Meanwhile, the

bureaucratic system wherein these new bodies were created was still corrupt and ineffective due to lack of

reforms (Melnykovska, 2008, p. 7). Wolczuk (2004, p. 14) argues that there is a problem of ‗over-

institutionalization, competition and lack of coordination‘. According to Wolczuk (2004, p. 15), the

Ukrainian bureaucracy is ambiguous and sometimes indifferent when it comes to European integration,

while it is more occupied with inter-institutional competition with regard to who decides what, and who is

the key player in European integration.

4.4. National Security and Defense Council (NSDC) The National Security and Defense Council (NSDC) is the main actor in the formulation of Ukraine‘s

foreign policy. Its members are shown in the table below. The president is the chairman, and is in the

position to appoint membership of the NSDC. The chairman of the Verkhovna Rada can take part in

meetings (Presidency of Ukraine, 2010, online). The current staff of the NSDC is as follows:

Viktor Yanukovych President

Raisa Bohatyriova Secretary of NSDC

Mykola Azarov Prime minister

Sergei Levochkin Head of Presidential Administration

Michael Ezhela Bronislavovich Minister of Defense

Anatoly Graves Minister of Internal Affairs

Medveko Alexander Prosecutor General of Ukraine

Inter Valery Head of Security Service of Ukraine

Konstantin Grishenko Minister of Foreign Affairs

Volodymyr Stelmakh Chairman of the National Bank of Ukraine (by consent)

Volodymyr L. Lytvyn Chairman of Verkhovna Rada

Alexander Lavrinovich Minister of Justice

From: National Security and Defense Council, Official website NSDC, 2010

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The NSDC is very influential because, although it is only assigned with tasks regarding security and

defense functions, the council has a large part in defining the guiding principles of presidential policies.

This is due to the fact that under the Kuchma administration, the presidential advisor Volodymyr

Horbulin (then head of the NSDC) defined security to include not only foreign policy, but also national,

economic, informational and environmental facets. Under the heading of security he also brought the

protection of social values and both the individual and the constitutional order. This gives the NSDC

more leverage in the policy-making and legislation process, and makes the NSDC a council with a very

broad jurisdiction (Zimmer, 2006, p. 281; Nordberg, 1998, p. 74).

The Secretary of the NSDC is appointed by the president. In January 2008, the then president

Yushchenko appointed Raisa Bohatyriova as the secretary of the NSDC. Bohatyriova is a prominent

figure within the Party of Regions, and is a close companion of one of the most influential figures in

Ukraine, Rinat Akhmetov, the leader of the Donetsk clan. 12 The foreign policy preferences of the NSDC

are best described as reflecting the policy preferences of the president (who is chairman) and of the

secretary, who is appointed by the president. Bohatyriova, the current secretary of the NSDC, was

People‘s Deputy of the Party of Regions before taking up her current position. Akhmetov, in turn, is one

of the long-time allies of Yanukovych. Bohatyriova did get into trouble, however, when she stated in 2008

that Viktor Yanukovych, the Party of Regions chair at the time, did not speak for all Party of Regions

members on foreign policy issues. Bohatyriova clashed with Yanukovych on the question of the territorial

integrity of South Ossetia in the 2008 Russian-Georgian conflict, and she mentioned that she was in favor

of Ukraine entering NATO‘s Membership Action Plan (MAP). So with regard to the foreign policy

preferences of the NSDC, it is difficult to state that all members have a uniform opinion on Ukraine‘s

positioning between East and West. One could argue, however, that the policy preferences of the

chairman, thus the president, are the most important, as the president has the power to appoint and

dismiss the different members of the NSDC.

4.5. Constitutional Court The Constitutional Court of Ukraine was set up in 1996 in order to safeguard the supremacy of the

Ukrainian Constitution as the fundamental law of Ukraine throughout the whole state:

The activity of the Constitutional Court of Ukraine is based on the principles of the rule of law,

independence, collegiality, equality of judges' rights, openness, comprehensive examination of

cases, and the soundness of the decisions it adopts.

Constitutional Court of Ukraine, 2010

The Court is according to Wolowski (2008, p. 38), however, one of the institutions in Ukraine that is

‗paralyzed‘ by Ukrainian politicians. This is caused in part by the fact that the Ukrainian constitution does

12 Akhmetov, while being an ardent supporter of Yanukovych, briefly supported Yushchenko after the Orange Revolution, and the appointment of Bohatyriova as secretary of the NSDC can be seen as a ‗repayment‘ from Yushschenko to Akhmetov for this support.

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not provide for the independence of the judiciary, only for the independence of individual judges. This

means that the independence of the judiciary suffers greatly from pressure of both political and business

groups, and the related corruption that troubles Ukraine. Many of the judges in the Constitutional Court

originate in certain political camps, and have often been involved in so-called reiderstvo (raiding). This is the

enforced take-over of an enterprise by businessmen on the basis of forged ownership titles. The key

players in this raiding process are often Constitutional Court judges. (Wolowski, 2008, p. 38). In sum, the

Constitutional Court in Ukraine adds to the political spectrum yet another platform in which oligarchs and

politicians can lobby for their own preferences.

4.6. Verkhovna Rada (parliament) The parliament, the Verkhovna Rada, consists of 450 deputies. According to the Constitution of Ukraine

(Verhovna Rada, 1996), the Verkhovna Rada is the sole legislating body of Ukraine. The Rada determines

the principles of domestic and foreign policy (Art. 85.5, Constitution of Ukraine), approves the budget of

Ukraine (Art. 85.2), declares war at the request of the president and approves the use of the Armed Forces

(Art. 85.9). The ministers should be approved by parliament. Since the constitutional changes of 2006 the

parliament is also able to dismiss the prime minister.

According to Nordberg (1998, p. 73), the Rada is essentially limited to drafting general principles of

domestic and foreign policy, while all the rights of implementation reside with the presidency. There have

been significant changes, however. In 2006 there has been a constitutional reform, extending the

legislative period of the Rada to five years. Moreover, new governments are now formed after

parliamentary elections, instead of after presidential elections, within 60 days after the fall of the former

government. The parliamentary majority may also dismiss the prime minister as well as individual

ministers since the constitutional reform (Zimmer, 2006, pp. 281-2). Before the reform, many elected

deputies changed fractions after the elections, making the building of a stable majority very difficult.

Therefore, members of parliament now lose their mandate if they leave the parliamentary group of the

party on whose list they were originally elected (Menlykovska, 2008, p. 8).

The Verkhovna Rada is, according to Zimmer (2006, p. 290), a forum strongly used by oligarchs and other

businessmen (managers, entrepreneurs, lobbyists, industrial actors) for their economic interests. In 2002,

364 of the 450 deputies in Ukraine were directly or indirectly ‗connected with commercial structures‘, and

202 deputies were leading executives of enterprises. Around two-thirds of the deputies in 2002 were

dollar-millionaires, according to Åslund (cited in: Zimmer, 2006, p. 290). This was caused in part by the

low state financing of parties and electoral campaigns, as well as insufficient oversight on party financing.

This made it possible to ‗buy‘ seats in the Rada. (Zimmer, 2006, p. 291).

As Moshes (2004, online) argues, ever since Ukrainian independence, there has been no single ideology

that has been supported by a majority of voters. Political parties in Ukraine thus are not united around

different ideologies, and are fragmented. An example is the coalition called ‗For a United Ukraine!‘, which

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presented itself in 2002, but fell into eight factions within months. In June 2010, the Verkhovna Rada

included five parties, which will be discussed in turn below.

4.6.1. The Party of Regions The Party of Regions (PRU) was created in 2001 with the unification of five existing parties, among those

the Party of Regional Revival of Ukraine. The PRU mainly represents the business interests of the elites

from the Donbass region, a highly industrialized region of Ukraine, a region which used to be the model

for the rest of the country during Soviet rule. The elites became powerful after Ukrainian independence in

1991, during a period in which the economic liberalization and legal ‗laxness‘ provided room for rapid

self-enrichment. The Donbass region is represented in politics by two clans. The so-called ‗Donetsk clan‘,

which entered the political arena when Yanukovych was appointed as prime minister in 2003 and has been

very powerful in Ukrainian politics, and the Industrial Union of Donbass (ISD), which gained its power

after the Orange Revolution (Wolczuk, 2006, p. 10). Although the affiliations of the oligarchic groups in

Ukrainian politics are constantly subject to change (as will be explained in more detail in section 4.8), the

PRU is predominantly backed by the Donetsk clan.

The PRU finds its electoral base mainly in the eastern and southern parts of Ukraine. In the 2004

elections, the party promised lower taxes, improved pensions and a devolution of powers to regional

governments. Moreover, it promised a doubling of state investments in agriculture. A significant amount

of party members on the list were former members of the Kuchma administration, industrialists and

regional leaders from eastern Ukraine (Hesli, 2007, p. 508). The PRU is ideologically inclined to favor the

Russian vector, on both cultural issues such as making Russian one of the official state languages, and on

foreign policy issues, opposing Ukrainian accession to NATO, demanding keeping good relations with

Russia and the preservation and development of the Single Economic Space with Russia (Partach et. al.,

2005, p. 10).

According to Szeptycki, however, the Party of Regions does not have a uniform foreign policy agenda.

One of the reasons for this is that the party is internally divided into a so-called ‗ business fraction‘, which

consists of younger and more pragmatist businessmen, on the one hand, and the political fraction, made

up of older and more radical representatives of the Donetsk clan, such as the current prime minister

Azarov. While the business fraction of the Party of Regions is in favor of closer cooperation with the

European Union because of the potential benefits of market access, capital and modern technologies, the

political fraction is in favor of a rapprochement with Russia (Szeptycki, 2008, pp. 45-46). Both fractions

agree, however, that keeping relations with Russia solid is important. Most of the business fraction elites

are involved in power industry sectors, and the natural resources that come from Russia are of vital

interest for their industries.

One of the most influential figures within the Party of Regions is Rinat Akhmetov, owner of the System

Capital Management (SCM) holding, a company which operates in heavy industry, steel processing,

banking and insurance and media and telecommunications. Akhmetov is the leader of the business

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fraction within the Party of Regions. SCM is dependent both on stable relations with Russia and on

progress in Ukraine‘s relations with the European Union. European Union countries are the main

destinations for SCM‘s foreign investments, notably Bulgaria, the UK and Italy. Akhmetov therefore

claims to unequivocally support Ukraine‘s EU accession. He remains, however, cautions about making

bold statements, arguing that the accession process would take at least 10 to 20 years (Szeptycki, 2008, pp.

45-47). Moreover, Akhmetov argues that Russia and Ukraine are neighbors, partners and friends, and

should therefore engage in a balanced and mutually beneficial relationship. In this regard, Akhmetov has a

similar position as the head of the PRU, Yanukovych.

4.6.2. Block of Yulia Tymoshenko The Block of Yulia Tymoshenko (BYuT) is named after the founder and leader of the block. Tymoshenko

was the founder of the Batkivshyna Party (Fatherland Party) in 1999, and in November 2001 led the

fusion of five parties into the BYuT.13 Its goals are, according to the Official Website (Block of Yulia

Tymoshenko, online):

BYuT formally seeks to move the country toward greater political transparency, increased

governmental accountability, more economic opportunity through market liberalization, European

Union integration, and increased energy security for Ukraine.

While Tymoshenko overtly calls for European integration in this statement, the last phrase on increased

energy security is clearly directed at her Russia-policy. The call for greater political transparency is the

most prominent topic of Tymoshenko. During the Orange Revolution she pled multiple times for the end

of corruption and self-enrichment in government circles. She and Yushchenko took power in 2005.

However, their relationship fell into decay, ending in a feud. She had to leave her post as prime minister,

and while she took the job back for a brief moment in 2007, the problems between the two former allies

inhibited proper cooperation. This resulted in a political paralysis which could not have come at a worse

time, with the financial crisis hitting Ukraine hard (‗Profile Yulia Tymoshenko‘, 2010). During her second

time as prime minister, she made European integration a strategic priority (Melnykovska, 2008, p. 6). In

her campaign for the 2010 elections, Tymoshenko focused on Ukraine‘s integration with the European

Union. Her plan was to implement significant reforms in Ukraine, in order ‗to build Europe in Ukraine,

after which Ukraine will be a member of the European Union‘ (Kuzio, 2009, online). The person that

Tymoshenko would have wanted to become prime minister had she been elected, Hryhoriy Nemyria, has

lobbied very hard to fulfill the Ukrainian membership aspirations, not only in Brussels, Berlin and Paris,

but also with the European People‘s Party, the largest political grouping in the European parliament

(Kuzio, 2009, online). In the August 2009 issue of the Business Ukraine magazine (qtd. in: Kuzio, 2009,

online) he argued:

13 These five parties were the Batkivshyna Party, the Patriotic Party of Ukraine, the Ukrainian Conservative Republican Party, the Ukrainian Party ‗Sobor‘, and the Ukrainian Social Democratic Party (Block of Yulia Tymoshenko, About, online).

63

What is of importance is the ‗journey‘ to European integration as a means to forge political

consensus, stability and lasting prosperity. Today, the conversation for my team is not about

potential timeframes for EU membership, but about the pace of reform.

On the European support during the financial crisis, he stated:

[The support] from EU member states only whets the appetite further (of Ukraine) to become a

full member of the world‘s largest, most stable trading block.

In an article in Foreign Affairs, strikingly called ‗Containing Russia‘ (2007), Tymoshenko expresses in harsh

words that the Western countries should be more pro-active in containing Russia, to prevent it from

becoming a hegemon in its region once again. While calling herself a proud European, she calls upon the

West to stand up against Russia:

In the name of peacekeeping in places such as Abkhazia, South Ossetia, and Trans-Dniestria

(restive regions within former Soviet republics), Russia has sought to reestablish its tutelage, and

the West has largely not objected. The West has done little to enable the Soviet Union's successor

states-- with the exception of the Baltic nations of Estonia, Latvia, and Lithuania -- to achieve

viable international standing (Tymoshenko, 2007).

Moreover, Yulia Tymoshenko, unlike Yanukovych, has not argued in favor of the Single Economic Space

with Russia; in fact she has not even mentioned it in her party program.

Meanwhile, she stresses that relations with Russia are extremely vital for the purposes of security and

prosperity ‗for all of us‘. This statement again, just as the quote on her website, indicates that she is not

merely pre-occupied with integrating Ukraine with the EU, but has a realistic eye on the importance of the

Eastern vector as well. She mentioned that her policy course is equally distant from that of Yushchenko,

who had very poor relations with Russia, as it is from that of the Russian-oriented Yanukovych (Kuzio,

2009, online). All the same, she stressed that she wanted to revive relations with Russia, just like

Yanukovych did. After the Orange Revolution, she met with Putin several times concerning the gas trade

between Ukraine and Russia, after which Putin expressed that his relationship with Tymoshenko was

‗special‘, that the relationship between Russia and Tymoshenko was improved during the Tymoshenko

government, and that she ‗was a woman with whom he could do business‘ (Korduban, 2009, online;

‗Profile Yulia Tymoshenko‘, 2010). During her campaigning period, she stated: ‗As the future president, I

will aim for the most peaceful and constructive, but also firm and pragmatic, relations with Russia and

other countries that are fundamentally tied to the national interests of Ukraine‘ (‗Ukraine's Tymoshenko

vows Russian ties‘, 2010).

In sum, Tymoshenko seeks to integrate with the European Union, whilst keeping good relations with

Russia. During her time as prime minister, she has tried to facilitate institutional reforms that are needed

for EU integration by setting up a Committee for European Integration and International Cooperation,

chaired by Hryhoriy Nemyrya, and put the coordination of EU reform under the auspices of the Cabinet

64

of Ministers, which would make it easier to formulate a coherent position of the Ukrainian government

(Melnykovska, 2008, p. 6). Meanwhile, Tymoshenko seems committed to keeping relations with Russia

good, not least because of the importance of Russian energy supplies.

4.6.3. Block Our Ukraine- People’s self-defence

The ‗Our Ukraine‘ party is headed by Viktor Yushchenko, the most notable leader of the Orange

Revolution in 2004. ‗Our Ukraine‘ during the Orange Revolution argued to becommitted to promoting

democratic and economic reforms, further independence from Russia and closer integration with the

European Union (Gnedina, 2005, p. 20). In 2002, ‗Our Ukraine‘ won the largest number of seats in the

Verkohvna Rada, and in 2004, Yushchenko won the presidential elections with the party, with help from

the BYuT and the Socialists. (Gnedina, 2005, p. 22). In 2007, ‗Our Ukraine‘ merged with the ‗People‘s

self-defense‘ party, amongst other reasons to win voters in central Ukraine, as the leader of the ‗People‘s

self-defense‘ party is very popular in these regions.

The block ‗Our Ukraine-People‘s self defense‘ is a right-of-centre block, that proclaims a strategy of Euro-

Atlantic and European integration. Yushchenko, known to be pro-Western, has always been strongly in

favor of integration with the EU. Not only did he want to integrate Ukraine with the EU, he also aspired

to Ukrainian membership of NATO. Under his presidency, Ukraine became a member of the World

Trade Organization (WTO), joined the EU Eastern Partnership and was promised by NATO it would

eventually become a member state.14 Furthermore, negotiations concerning a free trade agreement with

Brussels began during his presidency (Charap, 2010, online).

In his inaugural address as president, Yushchenko stated that Ukraine‘s place was in the European Union

(Turczyński, 2005, p. 73). The block made democratic reforms a priority during the election campaign of

2007, and since Yushchenko took office tax reforms were implemented, privatization deals in the past

were investigated (to assess whether they had been affected by corruption) and attention was paid to

freedom of the press. All these factors are of importance for the Ukrainian membership aspirations

(Melnykovska, 2008, p. 8; Gnedina, 2005, p. 22).

The presidency of Yushchenko, however, was first marked by internal strife with his prime minister,

Tymoshenko, and later by a period of difficult cohabitation with Yanukovych, who aimed at closer ties

with Russia than did Yushchenko. The popularity of Yushchenko tumbled in the course towards the 2010

elections due to his inability to deliver the promised reforms. Europe‘s ‗rejection‘ of Ukrainian

membership aspirations also led to a fall in popularity of the pro-European parties. In spring 2009, the

block went bankrupt, as the sponsoring businessmen dropped their support for Yushchenko in response

14 The EU Eastern Partnership is an eastern dimension created within the European Neighborhood Policy. It is aimed at promoting democracy and good governance, and aims to strengthen energy security. It should promote further closer relations between the EU and its members. It is furthermore aimed at promoting sector reform and environment protection. Countries included in the partnership are Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine (European Commission, 2008).

65

to his extremely low popularity, and the block ‗Our Ukraine – People‘s self defense‘ only received 2.5% of

the total votes in the 2010 election (Kuzio, 2009b, online).

It is important to note that while Viktor Yushchenko and his partner (at the time) Yulia Tymoshenko

openly claimed to be battling corruption and the oligarchic influence in Ukraine, both Yushchenko and

Tymoshenko themselves are intertwined with the oligarchic structures. So were the Industrial Union of

Donbass (ISD) led by Vitaliy Hayduk and Serhiy Taruta, and the so-called Pryvat group of

Dnepropetrovsk, headed by Ihor Kolomoisky, backers of the Orange Revolution.

4.6.4. Communist party of Ukraine

After Ukrainian independence in 1991, the Communist Party of Ukraine (CPU) was banned for two years.

In 1993, the ban was lifted and the CPU participated once again in Ukrainian politics. The current leader is

Petro Symonenko. The CPU has a strong desire to return to the Soviet past by integrating more closely

with Russia and Belarus (Shmelova, 2008, p. 27). The CPU is very much in favor of a pro-Russian style of

foreign policy, but at the moment is too small to be recognized as an independent player in Ukrainian

politics. During the 2010 elections, the CPU participated in an election block of left and central left

political forces, in which the Social Democratic Party of Ukraine (SDPU), the Justice Party and the Union

of Leftists also joined (Melnykovska, 2008, p. 9).

4.6.5. Block of Lytvyn

The Block of Lytvyn, led by Volodymyr Lytvyn (current chairman of the Verkhovna Rada) and currently

consisting of the People‘s Party and the Labor Party, is the smallest party currently in the Verkhovna

Rada, receiving a mere 1.8% of the total votes in the 2010 election.

Volodymyr Lytvyn became the deputy head of Kuchma‘s presidential administration in 1994. His time in

office became marked by controversy as he was caught on tape speaking about the need to cover up the

murder of journalist Georgiy Gongadze, allegedly killed by order of the Kuchma administration (Kuzio,

2002, p. 23). Lytvyn became the leader of the People‘s Party of Ukraine, but joined forces with the

Ukrainian Peasant Democratic Party and the Party of All-Ukrainian Union of the Left Justice in 2006

under the name Lytvyn Block. In the 2010 elections, the Lytvyn block also participated in the elections,

but this time consisted of the People‘s party and the Labor Party. In 2008, Lytvyn briefly took part in a

coalition with Yulia Tymoshenko, but this coalition fell apart due to continuing disagreements between

president Yushchenko and the prime minister Tymoshenko.

With regard to his foreign policy preferences, as a chairman of the Verkhovna Rada Lytvyn stated that

Ukrainian foreign policy ‗is supposed to be identical with the moods and intentions of the citizens‘

(Verkhovna Rada, 2009). In order to win the support of the former Socialist Party (SPU) voters in the

rural parts of Ukraine, the party program of the Block of Lytvyn features some Soviet style slogans and

plans (Kuzio, 2009c, online). Nevertheless, it remains unclear which of the two vectors is most heavily

represented in this party, as Lytvyn has changed sides multiple times over the past political struggles (once

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cooperating with Tymoshenko and now in a PRU government), usually backing the side with the upper

hand (Woehrel, 2009, p. 3).

In order to get a better picture of the elites and groupings in Ukraine, one has to get insight in the

oligarchic structure of the country, which to a large extent shapes the elite groupings.

4.7. Informal structures: the ‘party of power’ During the days of the Kuchma administration, a informal web of political connection emerged that

became known as the ‗party of power‘. The party of power used to be the gathering of the political elite

members who originated from different political backgrounds (including the Communist Party in which

many of the party of power people had leading roles during Soviet-Ukraine). The members of the party of

power were people working around the president and his administration, the government, the ministries,

the secretariat of the supreme council, the general staff of the armed forces, the ministry of internal affairs

and the ministry of the security service, but the party of power also comprises economic actors. The party

of power was organized as a network of members who thus had successfully secured power positions, but

at first did not pursue coordinated political action. Over time, the different actors formed different

networks, each network called a komanda, that crosscutted formal institutions, thereby linking the state

administration and the parliament, various political parties, media and economic actors. Each of the

komandas had a political patron or economic oligarch (who combines his economic power with his political

leverage) in its center.

With the demise of Kuchma, the ‗party of power‘ also stopped operating. But while it is no longer

possible to argue that a ‗party of power‘ exists in current times, this general political culture of governance

‗in the dark‘ still persists in Ukraine, and many of the connections consolidated before the Orange

Revolution have not evaporated. The oligarchic powers of today still possess a big role in transferring

power and resources from the political domain into the economic domain and vice versa (Zimmer, 2006,

p. 287; Bojcun, 1995, p. 240).

The presidency used to be the key instrument for ‗enacting the interests of the party of power‘, and

nowadays remains to fulfill this role for the informal power structures (Wolczuk, 2004, p. 3). However the

interests of the informal powers may compete with each other, they all have a close privileged relationship

with the presidency (Wolczuk, 2004, p. 3).

In order to obtain a better picture of the elites and groupings in Ukraine, one has to achieve insight in the

oligarchic structure of the country, which to a large extent shapes the elite groupings.

4.8. Oligarchic groups While the winds of the Orange Revolution blew hope through Ukraine that political change was possible,

that a change in power would emerge which would make possible free and fair competition for all political

groups and constituencies to fulfill their ambitions, six years of unfulfilled promises and continuing

nepotism and corruption have dashed these hopes.

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The reasons for the persistent authoritarian features of the country are rooted in structural problems in

Ukrainian politics. One of these problems is the ‗feckless pluralism‘, or, as Zimmer calls it, neo-

patrimonialism, discussed in the introduction of this chapter. Patrimonial logic, such as the fact that

behavior in the political arena is to a large extent based on personal relations and loyalties, is encrypted

into formal institutions, not only in the political process, but also in the bureaucracy. Ukrainian politics is

permeated by informal political processes that have a significant role in the domestic bargaining process.

The informal power structures thereby shape and dominate the political arena, which is, according to

Zimmer, less about programs and goals than about power and influence (Zimmer, 2006, p. 301).

In Ukrainian society, the political scene is dominated by oligarchs. An oligarch is, according to Szeptycki

(2008, p. 43), a businessman whose financial assets range from several hundred million to several billion

dollars. This money is acquired during the short periods of social and economic transformation that

enfeebled the state structure and the legal system, leading to opportunities for rent-seeking,

misappropriation of state assets and exploitation (Wolczuk, 2004, p. 4; Szeptycki, 2008, p. 43).

The difference between oligarchs in Ukraine and the business elites in the West are threefold, according to

Szeyptycki (2008, p. 43): Firstly, the oligarchs are directly involved in political life, as they see this as a

precondition for successful business. Secondly, the level of influence of the state on economic life is high,

because of the existence of a few dominant sectors, in which the state has a high stake. The third

difference is, as Szeptycki (2008, p. 43) puts it, ‗the frequent bending or outright violations of the laws, or

influencing legislation so that it is in line with their particular interests‘.

The oligarchs emerged during Kuchma‘s time in office and play a vital role not only in politics and the

economy, but also in the press. Until the Orange Revolution, there were three key oligarchic groups in

society: the Donetsk clan, the Dnepropetrovsk clan and the Kiev clan (Szeptycki, 2008, p. 43; Zimmer,

2006, p. 291; Kuzio, 2005, p. 170). During the Orange Revolution, Yushchenko received support from a

fourth clan, the Industrial Union of Donbass.15 Oligarchs have acquired power positions at all levels of

power. This makes them, according to Moshes (2004, online), interested in preserving the present

governance system. While up until the Orange Revolution, the oligarchs all sided with the president, the

Orange Revolution and the following constitutional reforms in 2006 resulted in a shift. Now, every

oligarchic group essentially supports one or several political parties or blocks. This means that the

oligarchic groups are not only merely interested in the president and the tight circles around him, but are

also in power positions in parliament and government (Szeyptycki, 2008, p. 44). While Yushchenko

promised to end the oligarchic system by dismantling it, Yushchenko himself became a partner for many

of the clans and their representatives during his presidency (Szeptycki, 2008, p. 43). This is probably

because he had to ‗repay‘ the oligarchic structures backing him during the Orange Revolution with their

support by offering them privileges and positions in his administration.

15 The ISD, while officially being a company, can be called an oligarchic group as it is often involved in the political process, as shown by the ISD‘s backing of the Orange forces.

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4.8.1. The Donetsk clan – System Capital Management

The Donetsk clan originates in the Region called Donbass, and is based in Donetsk, on the eastern border

of Ukraine. The majority of the inhabitants of Donetsk speaks Russian as a native tongue, and has strong

cultural ties with Russia. The Donetsk region accounts for around 20% of Ukraine‘s industrial production,

and for over 25% of Ukrainian exports (Van Zon, 2005, p. 77). Leader of the Donetsk clan is Rinat

Akhmetov, one of the richest and most influential figures in Ukraine, and head of System Capital

Management (SCM). The SCM group is a holding that is active in power industries, mining and steel

processing, but is also involved in banking and insurance, as well as in telecommunication and media

(Szeptycki, 2008, p. 45). The SCM groups and the Donetsk clan are politically involved in the Party of

Regions. Akhmetov was Yanukovych‘s main backer in the 2004 elections; the latter is also from Donetsk.

Since 2006, Akhmetov has been MP in the Rada for the Party of Regions.

The Donetsk clan and the Party of Regions do not have a recognizable, uniform foreign policy agenda. As

mentioned before, within the Party of Regions, there is a division between the business fraction and the

political fraction. Akhmetov is the leader of the business fraction within the party of Regions. Although

Akhmetov was Yanukovych‘s main backer in the 2004 elections, he has cooperated with Viktor

Yushchenko after the latter won the 2004 election, as Yushchenko could provide better conditions for

business operation for Akhmetov and his SCM group. The good relations with European countries that

Yushchenko promised would be fruitful for SCM, as it would open access to European markets, capital

and technology (Szeptycki, 2008, p. 46). Many of SCM‘s foreign investments go to European countries,

such as to steel plants in Bulgaria, Italy and the UK (Szeptycki, 2008, p. 46). Akhmetov plans to list his

SCM on the New York or London Stock Exchange, and therefore is trying to restructure his business

according to western norms and values, making it more transparent. Akhmetov also stated that he

‗unequivocally supports Ukraine‘s efforts towards EU accession‘. He nuances this statement, however, by

adding that this would take at least ten to twenty years of transition and preparation. The SCM group and

Akhemetov are, in sum, positive towards Ukrainian EU integration, as this suits their business interests in

many ways.

However, because the SCM group earns the bulk of its money in the power industries in the east, such as

steel processing and mining, stable relations with Russia are equally important. SCM has warm business

relations with, amongst others, Gazprom, which is in turn closely integrated with Russian authorities.

Akhmetov even struck a deal with Gazprom which enabled SCM to by Russian gas directly from

Gazprom. This is significant, because it would make the price SCM would pay for gas independent from

the variable gas prices charged to Ukraine by Russia (Szeptycki, 2008, p. 49).

The large-scale privatizations that engulfed Ukraine in the late 1990s were not followed by European

investments. While western investments were virtually absent, after the financial crisis in Russia in 1998,

Russian companies such as Gazprom, Yukos and Lukoil were expanding their business conglomerates

into Ukraine. Many Ukrainian businesses are intertwined with their Russian counterparts (Gatev, 2004, p.

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4; Moshes, 2004, p. 3). Because of the dependence on Russian companies, the Donetsk clan and the Party

of Regions attach great value to keeping relations with Russia tight. Akhmetov called Russia a ‗neighbor, a

partner and a friend‘ and propagates that the Russian language should have the same status as the

Ukrainian language, although this could be aimed to win the support of the large Russian-speaking

population (Szeptycki, 2008, p. 48).

In sum, the foreign policy preferences of the Donetsk clan and the SCM group are indecisive. On the one

hand, closer integration with the EU is propagated. On the other hand, the leaders of the Donetsk clan are

fully aware of the fact that their economic fortune is tied to Russian natural resources and businesses. The

Donetsk clan approach to foreign policy is thereby very pragmatic, ‗interested in specific solutions that

meet specific business needs, rather than in long-term influence on Ukraine‘s foreign policy‘ (Szeptycki,

2008, p. 65). It seems that the access to European markets and investments is deemed highly beneficial by

the oligarchs, but to devise and implement the necessary reforms in terms of economic transparency to

support their intention of EU integration proves to be very difficult. This is not the least due to the fact

that the Donetsk clan and the SCM group currently gain from the informally organized and disfranchised

political and economic situation in Ukraine. Implementing reforms demands making sacrifices, and these

sacrifices currently seem to hard to make. The foreign policy preferences of the Donetsk clan are shaped

by short-term-gain inspired, pragmatic motives. This implicitly makes European integration not their main

goal, as this integration process demands extensive and painful economic and political reforms (Wolzcuk,

2004, pp. 4-5).

4.8.2. Dnepropetrovsk clan

Dnepropetrovsk is a city in central/eastern Ukraine and, according to Nordberg (1998, p. 85), traditionally

was a Soviet bastion of power, a base of support for amongst others Leonid Brezhnev. Dnepropetrovsk

has continued its importance as a city during Ukrainian independence, being the home town of former

president Kuchma. During his term, many positions in government and surrounding the presidency were

held by Dnepropetrovsk clan members. While the Dnepropetrovsk clan might not be internally united on

all issues, they are united in their antipathy towards Donetsk. Meanwhile, the Dnepropetrovsk

Eastone/Interpipe clan supported Yanukovych in the 2004 elections (Nordberg, 1998, p. 85; Szeptycki,

2008, p. 43).

Dnepropetrovsk consists of two main clans, one dominated by Viktor Pinchuk (Leonid Kuchma‘s son-in-

law) and Serhiy Tyhipko, who together control the company EastOne, formerly known as Interpipe,

which is a steel company and one of the world‘s largest pipeline producers. The other clan is the Pryvat

group, led by Ihor Kolomoisky. The Pryvat group was not very influential during the Kuchma era, and

never had a political patron. During the Orange Revolution, Kolomoisky was linked with the Orange

camp, and after the Orange Revolution, the Pryvat group has become more influential. I will discuss the

two rival clans of Dnepropetrovsk and their foreign policy preferences in turn.

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The EastOne/Interpipe group, led by Viktor Pinchuk, is a big player in the Ukrainian power industry, but

is also involved in banking and media. By virtue of the efforts of the Interpipe group, along with the

Social Democratic Party of Ukraine (united), SDPU(o), the Labor Party was created (Kesarchuk, 2008, p.

6). Pinchuk backed Yanukovych in the 2004 elections (Kuzio, 2005b, p. 355). A close ally of Pinchuk is

Serhiy Tyhipko, who was head of the 2004 Yanukovych campaign. Tyhipko became head Council of

Investors during Tymoshenko‘s government (Kuzio, 2008, online).

As with the SCM group, the EastOne/Interpipe foreign policy preferences are largely a result of their

economic interests. As opposed to the nuanced position of the SCM, Pinchuk declared quite clearly that

he was in favor of ‗the speediest possible accession to the EU‘, although he pictures Ukraine‘s accession to

happen in 2020 (Szeptycki, 2008, p. 51). EU accession of Ukraine would mean access to the EU market,

something that the pipeline entrepreneur would benefit from. Pinchuk has been lobbying very hard for a

rapprochement between the EU and Ukraine. Amongst other measures, he launched the Yalta European

Strategy forum, which is aimed ‗to promote the development of a just, free and prosperous Ukraine, to

open the country to the rest of the world and to support Ukraine‘s membership to the European Union‘

(‗About YES‘, 2007). Moreover, he stated in 2005 (qtd. in: Kuzio, 2006, p. 106):

We, the Ukrainian business community, can and should build a bridge for Ukraine to Europe. It is

necessary and profitable for us to make every effort for Ukraine‘s integration into European

structures and, at the same time, import and implant European values, rules, and standards into

our reality.

Pinchuk has pled on several occasions that Ukraine should implement the necessary economic and

political reforms to make EU integration possible. Pinchuk‘s flirting with the EU could well be fuelled by

economic motives. While the majority of his exports go to former Soviet-countries, the European market

is high-end, and European membership could open even more markets for Pinchuk (Zawada, 2006,

online).

Rapprochement with the EU does not prevent the Dnepropetrovsk clan from having solid relations with

Russia, however. As mentioned, Pinchuk still exports most of his products to former Soviet states, notably

Russia, and he propagates cooperation between Russia and Ukraine in areas such as aviation, steel

processing and outer space technologies (Szeptycki, 2008, p. 53).

The Pryvat group is the rival clan coming from Dnepropetrovsk, led by Ihor Kolomoisky and organized

around the largest bank in Ukraine, the Pryvatbank. The assets of the Pryvatbank in early 2008 were

estimated at around 11 billion dollars (Szeptycki, 2008, p. 59). Pryvat is very big in foreign investments,

with assets in the Evraz Group (a steel concern of Russia‘s Roman Abramovich), in the US, the Czech

Republic, Georgia, Turkey, Italy and the UK (Szeptycki, 2008, p. 60). Pryvat furthermore owns 42% of the

state oil and gas company, Naftohaz Ukrainy.

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Although the Pryvat group lacked a political patron during the Kuchma era, the Orange Revolution and

the following events led to the political involvement of Kolomoisky and his partners. Kolomoisky and

Pryvat, who rival very much with EastOne/Interpipe (whose Serhiy Tyhipko ran Yanukovych‘s 2004

election campaign), supported the Orange camp, and since then both definitively lost their favor with the

current president, Yanukovych. One of the reasons for Pryvat‘s favor for the Orange camp was that

Yushchenko had made promises to Pryvat that made Pryvate consider Yushchenko as an ally against rival

EastOne/Interpipe (‗Ukraine: Pryvat-Yushchenko tie spoils anti-graft aim‘, 2007).

Kolomoisky and his partners claim not discuss foreign policy, probably because of the scope of countries

in which Pryvat has invested (Szeptycki, 2008, p. 60). The Pryvat group would, however, benefit from

European integration, because many of its investments are in EU countries. Improved trade conditions

and a more stable and transparent economic environment in Ukraine (such as improved protection of

property rights) would be beneficial for the Pryvat group (Shapovalova, 2008, p. 2). According to Taras

Kuzio (2006, p. 106), Ukraine‘s large-business owners, such as Pryvat, prefer to purchase businesses in the

EU, rather than in Russia. The Pryvat group is, however, very committed to keeping relations with Russia

solid, as Russia is an important business partner. Moreover, Putin called upon Naftohaz Ukrainy, 42% of

whose shares are owned by Pryvat, to merge with the Russian Gazprom This would tie Pryvat‘s fortune

even more closely to that of Russia (Socor, 2010, online). A merger of Naftohaz Ukrainy with Gazprom

would de facto mean a take-over by Gazprom as the latter is much larger. This is why Yanukovych rejected

this offer by Putin, instead arguing for a joint venture (Korduban, 2009).

In sum, while Pryvat is a very closed clan, which rarely goes public with its opinions on foreign policy

issues, it stands to gain from both close cooperation with the EU and close cooperation with Russia.

Pryvat‘s economic dependence is spread geographically over countries both in the East and in the West.

Pryvat‘s preferences seem just as pragmatic and economically-informed as the foreign policy preferences

of the Donetsk clan and its rival, EastOne/Interpipe groups.

4.8.3. The Kiev clan

The Kiev clan, led by Hyhoriy Surkis and Viktor Medvedchuk, is linked to the Social Democratic United

Party of Ukraine (SDPUo), and was the home base of Ukraine‘s first president, Leonid Kravchuk. The

Kiev clan became powerful during Kuchma‘s time as president. Although Kuchma is from the

Dnepropetrovsk clan, he tried to expand his support base towards the Kiev clan. This caused tension

between the two clans, who were both competing for exclusive privileges with the president. According to

Bukkvoll (2004, p. 14), Kuchma included the Kiev clan purposively. Not only could the wealthy Kiev clan

be a dangerous enemy, but competition between the two clans in order to acquire Kuchma‘s attention

could tilt the balance of power between the two clans, on the one side, and Kuchma, on the other side,

into the latter‘s favor.

As the Donetsk clan came to enter politics in 2001, Kuchma expanded his support base to the Donetsk

clan as well. This resulted in a situation in which all oligarchs obtained political posts of power after the

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2002 elections. The Donetsk clan had acquired the post of prime minister (Viktor Yanukovych), the

Dnepropetrovsk clan the post of CEO of the Central Bank (Serhiy Tyhipko), and the Kiev clan the post

of head of the presidential administration (Viktor Medvedchuk). Thereby, the Kuchma administration

rested on all main oligarchic clans in the country (Moshes, 2004, online; Bukvoll, 2004, p. 15).

In the last years of his presidency, however, Kuchma came to rely increasingly on the Kiev clan. The Kiev

clan had acquired its wealth mainly through benefiting from the tremendous privatization waves that

engulfed the country after its independence. Moreover, Medvedchuk had acquired the post of head of the

presidential administration after the 2002 parliamentary elections. As a presidential decree of 2003 had

moved foreign policy authority increasing to the presidential administration, this brought Medvechuk and

his clan into a powerful position (Bukkvoll, 2004, p. 15; Moshes, 2004, online).

Medvedchuk is known to be a pro-Russian, according to Taras Kuzio (2004, online), even anti-American

and anti-Western in his opinions on Ukrainian politics. He is a firm promoter of Ukraine joining the

Common Economic Space with Russia. Medvedchuk‘s right hand, Mikhail Pohrebinskii, stated that those

who oppose the Common Economic Space are ‗Euro-romantics‘, and he dismissed their slogans about a

return to Europe as no more serious than the ‗empty babble about the restoration of the Soviet Union‘

(qtd. in: Bukkvoll, 2004, p. 16). During the Orange Revolution, Medvechuk was an ardent opponent of

Yushchenko, and allegedly was involved in the large scale electoral fraud of the 2004 election. After the

Orange Revolution, the Kiev clan lost considerable influence. The SDPU(o) as a party was marginalized,

and Medvedchuk‘s strong ties with and dependence on the fraudulent Kuchma administration made the

Kiev clan lose its importance after 2004 (Szeptycki, 2008, p. 43).

4.8.4. The Industrial Union of Donbass

As the power and importance of the Kiev clan waned after the Orange Revolution, the Industrial Union

of Donbass (ISD), led by Vitaliy Hayduk and Serhiy Taruta, gained its influence. The ISD was established

in 1995. The ISD operates in black metallurgy, as well as in power industries, machine engineering, and

agricultural and food sectors (Szeptycki, 2008, p. 53). ISD‘s main rival is the SCM group, also originating

in the Donetsk region.16 The SCM group was formed by Akhmetov, who broke away from the ISD in

2002 and subsequently became one of the Donetsk clan heavyweights. Both Hayduk and Taruta are

estimated to own assets worth two billion dollars each (Szeptcycki, 2008, p. 53).

The ISD allied with Viktor Yushchenko following the Orange Revolution of 2005. This alliance with

Yushchenko was partly inspired by the ISD‘s antipathy towards the Donetsk clan and its SCM, who were

backing the Party of Regions. This alliance was equally beneficial for Yushchenko, as it could gain him

support in the eastern and southern regions of Ukraine. The ISD, as well as the other clans, can propel

electoral support as they are very influential in the region in which they originate. Not only are they a very

important employer, they also have a large stake in the media and local politics After Yushchenko was

16 In this thesis, the SCM group is sometimes termed the Donetsk clan, as it is most commonly called in the literature. Although the ISD also originates in Donetsk, it should not be confused with the SCM group Donetsk clan.

73

elected, he made Vitaliy Hayduk the NDSC secretary in October 2006. But as Hayduk dubbed

Yushchenko as being too radical a president, Hayduk lost his favor and was dismissed as NDSC secretary

in May 2007. Soon hereafter, Hayduk and the ISD sought and found an alliance with Tymoshenko.

(Szeptycki, 2008, pp. 53-54).

With regard to the ISD‘s foreign policy preferences, the ISD resembles the other clans in the sense that it

favors pragmatic approaches with regard to foreign policy over longer-term plans and objectives

(Wolczuk, 2006, p. 16). The ISD is trying to expand its steel empire internationally, especially in Poland.

Closer EU integration of Ukraine through a free trade area would benefit the ISD. Despite this, however,

the ISD likes to remain vague in declarations about the benefits and threats of the EU. They argue that

the persistent focus on EU membership of some pro-EU politicians is an impediment for the pragmatic

gains that can be achieved through closer but selective economic integration with the EU (Wolczuk, 2006,

p. 16). Szeptycki (2008, p. 55) argues that the reluctance of the ISD to declare itself clearly in favor of

Ukraine‘s full membership of the EU shows that capital expansion of Ukrainian businessmen in the EU

does not always suggest that the oligarchs support EU-Ukraine rapprochement. An explanation for this

reluctance could be their skeptical stance towards the need for reforms which EU integration demands.

These reforms will be aimed, as mentioned in the ENP, at promoting democracy and rule of law, and will

also mean greater attention for a transparent business sector. As many of the oligarchic group prefer to

conduct their business in ‗murky waters‘, their support for EU-Ukraine rapprochement is thwarted by

their hesitant attitude towards the necessary reforms, as will be further elaborated in section 5.1.

The foreign policy preferences of the ISD towards Russia are critical. Both Taruta and Hayduk often

publicly criticize Ukraine‘s energy agreements with Russia, stating that Ukraine is increasing its

dependence on Russia through these agreements, which is not beneficial for the country (Szeptycki, 2008,

p. 56). Hayduk and Taruta are often ambivalent in their statements about the Russian language. Although

they oppose the status of official language for Russian, they are in favor of securing the rights of the

Russian population in Ukraine (Szeptycki, 2008, p. 57). In the 2010 presidential elections, the ISD backed

Tymoshenko, who shares the ISD‘s ambivalence towards Russian influence in Ukraine.

4.8.5. Foreign policy preferences of the clans

With regard to their foreign policy preferences, one can conclude that not all elite groupings have the

same foreign policy preferences when it comes to Ukraine‘s positioning between East and West. The

different clans thus have different preferences when it comes to Ukrainian positioning. What the clans

have in common, however, is their pragmatic view on Ukraine‘s foreign policy. Most of the clans do not

favor EU integration due to a certain sense of ‗Europeaness‘, but rather due to the attractiveness of

European markets for the companies that lie at the heart of the clans. In turn, their wish to keep solid

relations with Russia is equally not inspired by a craving for the Eastern culture or Soviet-styles of policy-

making, but by a clear sense of self-interest: Russia provides the vast bulk of energy resources that all of

these clans use in their steel, mining and metallurgy plants.

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In sum, according to Wolczuk, many of the nomenklatura are more occupied with assuring and

continuing their own power-position on the short term. This has resulted in political reforms that were in

essence ‗self-serving‘, but were detrimental to the country. ‗In effect, the power elite gambled on

preserving power almost regardless of the short- and long-term costs for the country, even if that resulted

in the further deterioration of Ukraine‘s international standing‘ (Wolzcuk, 2004, p. 4). According to

Wolzcuk (2004, p. 5), this does not mean that the elites do not want to comply with European norms and

values because they are against European integration, but it means that they were unwilling or unable to

implement the necessary political and economic reforms. Many of the elites gain from the meager

institutional and political transparency: Intransparency facilitates financial embezzlement and corruption

which renders them wealthy, but also enables the elite to easily influence the political process, as will be

explained in more detail in section 5.1.

The foreign policy preferences of the clans in Ukraine are to a very large extent inspired by pragmatic

motives, such as the securing of cheap energy with Russia and the access to European markets. The clans

do not balance between Western or Eastern ideologies or identities, but they balance between their

business interests, as will be further explained in chapter 5.

4.9. Civil society In the above account of domestic actors and their foreign policy preferences in Ukraine, civil society in

the form of NGOs is absent. This has to do with the historical weakness of civil society in Ukraine, that

only very limitedly possesses Moravcsik‘s political resources of initiave, influence of procedures,

institutions and knowledge, and a very limited power over ideas (Kubicek, 2005, p. 284). This weakness

stems, according to Melnykovska (2008, p. 10), from the lack of trust in both politicians and NGOs by the

Ukrainian people, the absence of a clear strategy on behalf of the NGOs, and a distinct apathy and

pessimism in Ukrainian society concerning not only the individual‘s own life, but also the country‘s future.

Nevertheless, the number of NGOs has risen significantly in Ukraine. From 2000 until 2004, the build-up

of the Orange revolution, the number of NGOs in Ukraine has risen from 25.500 to 40.000 (USAID,

2006, p. 19).

The developments of the Orange Revolution sparked a bit of hope for NGOs in Ukrainian civil society,

as civil society stood at the forefront of the Orange Revolution. Stewart (2009, p. 193) finds that despite

the entrance of prominent Ukrainian civil society movements during the Orange Revolution, both within

Ukraine and abroad, positive consequences have failed to crystallize. The dialogue between the NGOs and

the state structures that the NGOs have hoped for still does not exist. NGOs suffer from uneven access

to information on government policy, and insufficient experience with using this information to control

the government (USAID, 2006, pp. 19-20). The NGOs main problem remains financing, and despite the

brief success of the Orange Revolution, foreign assistance to Ukrainian NGOs has waned over the past

years. According to Stewart (2009, p. 193), EU support for NGOs is equally problematic. Not only is the

bureaucratic nature of the EU often too complex to fathom for especially the smaller NGOs, the EU‘s

75

expectations with regard to the ‗democratization powers‘ of the NGOs have proved too hopeful. The

ENP Action Plan pays explicit attention to NGOs, as agents of democratization, and supporting actors of

the ENP. Thus far, this has not resulted into positive results (Stewart, 2009, p. 193).

Another important development regarding the NGOs is the increased involvement of the business sector.

The business sector has augmented its interest in cooperation with NGOs, becoming donors of NGO

activities. Involved in supporting NGOs are, amongst others, Rinat Akhmetov and Viktor Pinchuk, both

influential oligarchs (Stewart, 2009, p. 187). One could question what this greater role of business means

for the NGOs and their role as ‗democratizing agents‘, as the EU likes to see them. According to Stewart

(2009, p. 189), the businessmen are most eager to support projects improving their image (helping the

poor, sick and elderly). NGOs that have a ‗watchdog function‘, such as monitoring the government, free

press or observing the elections, are not being sponsored by the businessmen, as most of these

businessmen are themselves involved in the political structures that might be monitored.

Despite the influence of oligarchic groups on NGOs, however, the number of NGOs successfully

applying for EC grants has increased. Moreover, many NGOs in Ukraine operate with external funding,

such as the Eurasia Foundation, a non-profit organization supported by USAID, occupied with

supporting the Ukrainian transition towards a market economy, encouraging citizen involvement in civic

decision making and supporting the improvement of the Ukrainian public services (USAID, 2010).

Another example is the Indiana University Parliamentary Development Project (IUPDP), which assists the

Verkhovna Rada in adopting legislation, establishing methods and institutions that are benchmarks of

progressive transitional parliaments, such as facilitating feedback of citizens, and improving legislative-

executive cooperation (USAID, 2010).

Due to the wide range of NGOs that exist in civil society, it is not possible to define the foreign policy

preferences of the NGOs as a group. The most important aspect of NGOs that has to be noted is that

their policy preferences are shaped by the people behind the organization. Due to the fact that many

Ukrainian NGOs have feeble financial resources to strive for their goals, they have welcomed the

increasing financial support from political and economic actors in Ukraine. As mentioned before, even

clan leaders such as Akhmetov and Pinchuk are becoming increasingly involved in the NGO business.

This has consequences for the palette of NGOs in Ukraine, as these businessmen favor certain types of

NGOs, those NGOs that are not overtly critical of Ukrainian politics. Although there remain NGOs in

Ukraine that receive external funding, from amongst other supporters the EU, the oligarchic involvement

in Ukrainian civil society is not to be underestimated. In sum, the preferences of the NGOs with regard to

foreign policy are to a large extent a product of the preferences of their patrons, wealthy businessmen and

clan members.

4.10. Conclusion This chapter has provided an overview of the main domestic actors in Ukraine and their foreign policy

preferences. Discussed are the presidency and the presidential administration, the prime minister and the

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ministries, the National Security and Defense Council, the former ‗party of power‘, the Verkhovna Rada

and the five parties currently embodied in the Rada, the four most noteworthy clans and NGOs in

Ukrainian civil society.

Moreover, this chapter stressed the fact that political rule in Ukraine is exercised within a formal structure,

that has the claim of being rational, modern and democratic, but is permeated with a patrimonial system

of personalized and informal rule (Zimmer, 2006, pp. 284-285). Moravcik (1994, p. 4) defined domestic

societal groups as domestic constituencies whose support may be critical for the promulgation and

implementation of policy. This explains why this chapter has paid so much attention to the informal

structures surrounding the president and the different clans. These groups, albeit that they are not

formally represented in the domestic political structure of Ukraine, are very critical for the promulgation

and implementation of policy. This is also the reason why this chapter discussed the Constitutional Court,

which currently too often serves as an instrument for political processes, or as a platform for business

interests. Although the Constitutional Court cannot be said to have uniform foreign policy preferences, it

is important to be aware of the political function the Court can hold.

This chapter described the foreign policy preferences of the different domestic actors. Remarkably is that

in a society that is said to be illustrious for its societal cleavage between East and West (although it is

argued here that this is not the case), the foreign policy preferences of the domestic actors seem not to be

very identity- or ideology-inspired, but seem to be highly pragmatic. The motives for rapprochement with

either the EU or Russia by many of the domestic actors in Ukraine are inspired by economic and political

motives, such as the securing of cheap energy from Russia and the access to European markets, but also

the preservation and continuation of political power. Most of these motives are short-term. As Wolczuk

argues, this is caused by the fact that many of the nomenclature are more occupied with assuring and

continuing their own power-position in the short term. This explains why many of the calls for European

integration have not been met by actual policy reform in the democratic and economic realms: Many

domestic actors like the European project and see many benefits in it, but the sustained long-lasting

process of reform that is required to obtain EU integration seems too high a sacrifice.

Table 4.2 provides a synthesis overview of what has been written in the above on domestic actors and

their foreign policy preferences. Chapter 5 will continue with the empirical knowledge found in this

chapter, and will look at which of the foreign policy preferences as depicted above prevail in the Ukrainian

domestic bargaining process, and how. It will subsequently assess what this means for the foreign policy

position of Ukraine between East and West.

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Table 4.2: Overview of domestic actors and their foreign policy tilts

EU oriented, pro-reform

• MFA

• 'Our Ukraine-People's self defence'

• EastOne/Interpipe clan

• Industrial Union of Donbass

Russia oriented

• prime minister Mykola Azarov

• Kiev clan

• Communist party

In between

Donetsk clan – SCM group

Pryvat clan

NSDC

Party of Regions

BYuT

Block of Lytvyn

MEEI

NGOs in civil society

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5. The domestic bargaining process and its consequences for Ukraine’s

positioning between East and West

In chapter 4, the main domestic actors and their foreign policy preferences were discussed. In this chapter,

I will discuss which interests prevail in the Ukrainian bargaining process. This will be done by assessing

how the preferences of the domestic actors translate into Ukrainian foreign policy preferences, and how

this process is shaped by the relative bargaining power of the different domestic groups involved.

Chapter 3 explained how a domestic preference formation process can be seen as a principle-agent

process. In this principal-agent model the head of state, or the highest political authority, is the agent and

societal groups are multiple principles. The principle and the agents interact in a continuous bargaining

process, wherein domestic constituents constrain the executive according to their relative bargaining

power (Moravcsik, 1994, pp. 4-5). Moravcsik (1994, pp. 4-5) argues that in a democracy, domestic groups

can pose two threats to the executive: the vetoing of specific policies or the imposition of electoral or

coalitional costs on executives (ex post). The constraints of domestic actors are the availability of

procedural instruments to constrain the executive‘s policies, and a knowledge barrier between principle

and agent. In chapter 4, however, it has become clear that Ukraine cannot be seen as a proper democracy.

Formal institutions and political relations do not capture the informal essence of Ukrainian politics, which

is characterized by a permeation of politics by informal political processes, which intertwine the legal and

institutional infrastructure of Ukraine with patrimonial and informal relations. In chapter 4, this situation

was labeled as ‗feckless pluralism‘. This means that Ukraine is ‗characterized by a significant degree of

political freedom, regular elections and changes of power between distinct political groupings (Zimmer,

2006, p. 284). Nevertheless, democracy remains superficial‘ (Zimmer, 2006, p. 282).

This situation of ‗ feckless pluralism‘ means that, in order to assess the relative influence of the different

domestic actors in the policy formation process, one needs to look at how these informal relations shape

the relative influence of the different domestic actors. Who derives power from these informal structures,

and who does not? The availability of procedural instruments to constrain the executive‘s policies that

Moravcsik (1994, p. 4) describes, therefore, has to be interpreted as being the availability of both formal

instruments as well as informal means of the domestic actors to constrain the executive. Moreover, the

‗knowledge barrier‘ between principle and agent, which concerns the ability of domestic groups to

monitor their executive, plays a significant role in Ukraine. As Moravcsik (1994, p. 12) argues, those

domestic constituents with good ties to the government have access to a stream of information on

diplomatic activities, whereas opposition groups need to incur high costs to achieve and analyze this

information. The informal relationships dominate politics in Ukraine, which leads to a web of crosscutting

networks in the higher spheres of policy making, linking the political and economic domain, networks that

form important ties to the government, and thereby become an important tool in augmenting the relative

bargaining power of the actors involved: Because of their extensive interlinkages with the agent (the

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presidency) and their positions in Ukraine‘s political system, their ability to monitor the executive is high.

Moreover, their positions in the higher spheres of policy-making provide them with ‗procedural power‘;

they possess procedural instruments to constrain the executive‘s policies.

One of the things that become clear in chapter 4 is that private economic interests in Ukraine are tightly

linked to political structures. Every oligarchic group has a big enterprise at its core, and every oligarchic

group in Ukraine officially or officiously supports one or more political forces. The oligarchic groups

under Kuchma‘s presidency were mainly organized around the president. After the Orange Revolution,

the powers of the president diminished (as explained in chapter 4). Therefore, the oligarchs are no longer

merely interested in the president and the close circle around him (‗the party of power‘), but also in the

parliament and the government (Szeptycki, 2008, p. 44). These findings are in line with the assumptions of

liberal intergovernmentalism, which posits that in national preference formation on issues of foreign

policy, economic interdependence with other countries as well as private economic interests are the

primary determinants of national preferences. In most cases, the rational choices made by national leaders

are a response to constraints and opportunities stemming from powerful economic constituents. This is

reflected very clearly in Ukraine‘s domestic bargaining process, as will be explained just below in section

5.1 (Moravcsik, 1998, 18).

To assess the domestic bargaining process in Ukraine along the lines of liberal intergovernmentalism

requires us to analyze the relative influence of domestic actors on national policy. Therefore, it is

important to look at what channels domestic actors have to influence the initiation of policy (initiative);

how they are able to influence domestic procedures, constitutional, statutory but also informal procedures,

according to which the policy-making process takes place; their ability to acquire knowledge and to level

out knowledge asymmetries (information); and the ability of domestic actors to justify policies (ideas)

(Moravcsik, 1994, pp. 5-6).

5.1. Centers of power As became clear in chapter 4, the political and institutional make-up of Ukraine concentrates the bulk of

the political power in Ukraine with the president, albeit less under the 2006 constitution than before. The

presidency still has the key role in articulating foreign policy goals, along with the presidential

administration. The power of the president is augmented by the NSDC, discussed in section 4.4. The

influence of the NSDC resides in its assignment to deal with tasks regarding security and defense

functions. As security has come to include not only foreign policy, but also national, economic,

informational and environmental facets since Kuchma‘s era as a president, the council has a large role in

defining the guiding principles of presidential policies. In terms of Moravcsik‘s sources of power, the close

ties between the NSDC and the presidency provide the NSDC with significant power of initiative,

powerful access to political procedures, and make it a significant initiator of foreign policy ideas. As the

president forms the NSDC and issues the council‘s decision by presidential decree, the NSDC has become

another institutional tool at the disposal of the presidency (Zimmer, 2006, p. 281).

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While Kuchma‘s era in office, especially in his first years as a president, was marked by continuous flirts

with the EU, one can expect the Yanukovych administration to take another course. As indicated in

chapter 4, Yanukovych has become known as being tilted towards the Russian vector, favoring increased

integration with Ukraine‘s eastern partners over western integration. Meanwhile, however, Yanukovych

has made clear that he aims to pursue a balanced course between East and West, and wants Ukraine to

become an ‗integral part of Europe and the former Soviet Union at the same time‘. Yanukovych‘s

balanced approach has to do with his background in the Party of Regions and the Donetsk clan. The

following section will explain the roots of Yanukovych‘s multi-vector approach in more detail (‗President

Viktor Yanukovych's address to the Verkhovna Rada of Ukraine‘, 2010).

5.1.1. Multi-vectorism and ambivalence as a choice of the oligarchy

The power of the presidency is being complemented and restricted in several ways. The political choices

of Yanukovych and his administration are derived from the political party whose interests Yanukovych

represents. His party has, in turn, an oligarchic base in which it is rooted, namely the Donetsk clan. This

section explains how the favoring of multi-vectorism by, amongst others, the Donetsk clan, resonates

beyond the clans into the higher circles of policy-making.

The oligarchic structures in Ukraine gained influence during the Kuchma presidency, especially during the

late 1990s. Rosaria Puglisi (2008), who studied oligarchic groups intensively, argues that the groups

consisted of businessmen who had gained their massive wealth during the first years of Ukrainian

independence, a period of intensive privatization and economic liberalization projects in Ukraine, which

provided opportunities for immense capital accumulation. During the Kuchma era in politics, the

economic elites were able to translate their economic power into political power. Due to the privileges

awarded to the oligarchs during these years (inter alia in the form of protection when conducting murky

business deals), an oligarchic system emerged and consolidated (Puglisi, 2008, pp. 57-58). As Szeptycki

(2008, p. 43) posits, these oligarchic groups were marked by their clear involvement in political life. Over

the years, these oligarchic groups have become the main actors in the Ukrainian political arena, due to the

fact that they developed tight-knit bonds with the presidency, which provided them with privileges and

secured political positions (Wolczuk, 2004, p. 3).

In fact, Kuchma stood at the base of the informal political system in which these oligarchic groups have

become intertwined, because as a president, he acted as an integrative factor in a heterogeneous

environment of different elite groupings with different business interests. Kuchma unified competing elite

clans ‗through the redistribution of material incentives and rewards‘ (Puglisi, 2008, p. 58). It was during

this period that the phenomenon of ‗feckless pluralism‘ emerged. In exchange for their privileges, the

oligarchs provided Kuchma with support against outside challengers. This support was often exerted

through operations in the informal sphere. A powerful president thus secured the existence of powerful

clans around him. The relative bargaining power of these clans is significant; due to their close ties with

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the executive they are not only able to monitor it, but also have access to procedural instruments that

constrain and shape the executive‘s policies.

Although the power of the presidency has waned since the constitutional changes of 2006, this has not

decreased the vital role of oligarchic groupings in Ukraine‘s political system. This might be due to the fact

that the elite groupings had managed to consolidate their power positions during the Kuchma years, and

ever since have been trying to maintain it. The clans still play an important role in Ukrainian society. Not

only are the oligarchic groups vital for keeping the Ukrainian economy afloat (as they are operating in

important sectors in the economy: Power industries, mining, banking and insurance), they are also

increasing their role in the Ukrainian media. Their control over the media is important in a political sense

as well because, if used properly, positive or negative media coverage can influence public opinion, making

or breaking political power (Szeptycki, 2008, pp. 44, 64). After the Orange Revolution, the oligarchic

groups were temporarily in the background, as they were associated with ‗old politics‘, the Kuchma era

and its accompanying semi-authoritarianism. Puglisi (2008, p. 65) describes, however, that after this brief

period of withdrawal, the oligarchic groups soon re-entered Ukraine‘s political stage: ‗They chose to come

out of the shadows in which they lived after the collapse of the Kuchma regime and to become public

figures again.‘

Informal power structures are quite powerful in Ukraine, such as the oligarchic clans. Over the past years,

the power structures that operate in the informal sphere have taken steps to permeate the formal political

structure of Ukraine. The informal groups have integrated themselves into Ukrainian politics. To give a

few examples: the current president Yanukovych used to be one of the most important people of the

Donetsk clan. His prime minister, Mykola Azarov, equally is an important figure in the Donetsk clan. The

NSDC secretary, Raisa Bohatyriova, is one of Rinat Akhmetov closest allies, who in turn is the current

leader of the Donetsk clan. Serhiy Tyhypko, former chairman of the Ukrainian central bank (The National

Bank of Ukraine), is one of the most important members of the EastOne/Interpipe clan of

Dnepropetrovsk. In sum, the oligarchic groups have acquired political positions in Ukraine that enable

them to co-shape Ukrainian foreign policy. ‗Ukrainian oligarchs have at their disposal the tools that can

effectively influence Ukrainian foreign policy‘ (Szeptycki, 2008, p. 64).

The relative bargaining power of the oligarchic groups, described by Moravcsik (1994, p. 4) as their ability

to constrain the executive, is thus very significant. As indicated in the above, the interests of these

oligarchic groups are primarily economic: They are shaped by their dependence on raw material supplies,

need for access to foreign investment capital and foreign market and by energy security considerations.

This has its consequences for the foreign policy preferences of most oligarchic groups, as these

preferences are also primarily concerned with securing economic interests. The oligarchs are not to be

seen as a monolithic entity, however. Chapter 4 has shown that the oligarchic groups, or ‗clans‘ are

structured around different cities and different enterprises. Many of the oligarchs switch alliances often,

depending on who is in power (‗Ukraine: Pryvat-Yushchenko tie spoils anti-graft aim‘. 2007). Their

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relative strength is thereby subject to permanent change (Bondarenko, 2002, ctd. in: Zimmer, 2006, p.

287). While their alliances and relative strength are subject to change, it is important to emphasize that the

influence of oligarchic groups on the foreign policy-making process remains significant, as, whatever their

alliances at the time may be, the oligarchic clans remain a manifestation of informal powers meddling with

the political process. The informal dimension of the political process this brings about remains a central

feature of the bargaining process.

Another source of power for the oligarchic groups and their respective political structures is the weak

judicial system, which is an easy prey for manipulation. According to Wolowski (2008, p. 38), the judiciary

is manipulated to a large extent by both political groups and business groups. This is in part due to the fact

that the independence of the judiciary is not provided for by the Ukrainian constitution. Moreover, many

of the judges in the Constitutional Courts themselves originate in certain political camps. As Moravcik

posits (1994, pp. 5-6), one of the sources of relative influence in the domestic bargaining process is the

availability of channels to influence the initiation of policy, as well as the ability to influence domestic

constitutional or institutional procedures. The manipulability of the Constitutional Court increases the

bargaining power domestic actors currently in power and in Ukrainian politics by creating yet another

platform for lobbying by those domestic actors with the proper means.

As mentioned before, Yanukovych‘s Party of Regions originates in the Donetsk clan. Chapter 4 has

described how the Donetsk clan, and the SCM group holding at its core, are the embodiment of multi-

vectorism: While there is the realization that closer EU integration might bring economic benefits to their

companies in the form of access to the European markets, investment funds and technologies, the

Donetsk clan, as well as other oligarchic groups, remains pragmatic and short-term focused in their

approach to foreign policy making, more interested in satisfying their business pursuits than in

consistently pursuing European integration, with its accompanying rules and regulations regarding their

businesses. The economic relations between Ukraine and Russia are of vital importance for their

businesses, because the bulk of natural resources (such as gas) comes from Russian enterprises. Moreover,

the Russian market contributes significantly to Ukraine‘s economy (Szeptycki, 2008, pp. 66-67). Therefore,

a multi-vector approach is the most suitable approach to foreign policy for the Donetsk clan (as it is for

most of the oligarchic groupings), as it provides a way for the groups to pursue their (economic) interest

in a pragmatic way, benefiting from relations with both vectors. An alternative approach to this

pragmatism could be a sort of long-term pragmatism: It is obvious that a company makes pragmatic

decisions rather than ideological ones. These pragmatic decision can be, however, both short-term and

long-term inspired. Long-term pragmatism would mean business pursuing the economic benefits

European integration could render, while acknowledging that this might damage their interests in the

short-term.

Long-term commitments to reform in line with either vector do not match the short-term pragmatic focus

of the oligarchic groups. Their interests reside in the short-term maintainance of solid relations with both

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Russia and the EU. Their multi-vector approach is taken over by other actors in the Ukrainian domestic

bargaining process, of example by the Party of Regions and Yanukovych in their foreign policy

preferences, but also by Yulia Tymoshenko and her BYuT (Shmelova, 2008, p. 27). The adoption of

vague, multi-vectored stances with regard to European rapprochement and solid relations with Russia is

characteristic for Ukraine‘s foreign policy ever since the country became independent in 1991. Ukraine‘s

foreign policy, according to Freire (2009, p. 248), therefore results in a ‗no-option‘: ‗Not always pushing in

the same direction, not always matching the expectations, not always fostering positive integration, this

dichotomy has become a reality in Ukrainian politics‘.

A good example of this ambivalence in foreign policy is Ukraine‘s uncertain commitment to the SES.

Ever since 2003, Russia is putting much effort into persuading Ukraine to integrate its economy ever more

closely with that of Russia. While many of the oligarchic structures in Ukraine have initially built their

success and their fortunes on close economic cooperation with Russia, their reluctance towards excessive

economic integration was for a long time keeping economic integration at bay. Ukraine was in favor of

creating a free trade zone, but did not want to join in a customs union. In February 2010, Viktor

Yanukovych stated to be prepared to initiate talks on a customs union. After some deliberation and heavy

criticism from, amongst others, Yulia Tymoshenko, during the spring session of the Parliamentary

Assembly of the Council of Europe Yanukovych argued that Ukraine‘s joining of the customs union is

impossible, due to its recent integration in the WTO, whose regulations prevent Ukraine from joining a

customs union. Even in Yanukovych‘ own Party of Regions, multiple contradicting statements were made

with regard to whether or not Ukraine should join a customs union under the SES (Bukvoll, 2004, p. 20;

‗Ukraine's new leadership eyes Customs Union with Russia – paper‘, 2010; ‗Ukraine's Yanukovych says

'no' to Russia, Belarus, Kazakhstan customs union‘, 2010).

Many of the oligarchic groups are acting increasingly like ‗agents for Europeanization‘ within Ukraine,

according to Puglisi (2008, p. 72). The Industrial Union of Donbass, for example, is engaging extensively

in the European market. It acquired a steel mill in Poland for $468 million in 2007, and is revealing plans

to buy majority shares in state-owned plants in Poland. Furthermore, it is currently trying to acquire steel

mills in Hungary. Their increased business operations in the EU zone integrate their firms and thereby

their clans more closely with the EU. But at the same time, the oligarchs contribute significantly to the

consolidation of Russian influence in Ukraine, by letting Russian capital expand in their enterprises, and

by their massive dependence on Russian energy (Szeptycki, 2008, p. 67). In sum, the oligarchic groups are

having their cake and eating it, too, when it comes to their consent or objection to closer EU integration

or closer cooperation with Russia. Because of the fact that the relative bargaining power of these

oligarchic groups is strong (due to their access to both information and procedures, and their ability to

initiate policy, not the least due to their positions in both government as parliament), this shapes

Ukrainian foreign policy preferences along the same ‗schizophrenic‘ way.

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This leads to a contradictory stance in Ukraine‘s positioning between East and West. As Wolczuk (2004,

p. 5) argues, the elites are fully aware of the potential benefits closer European integration embodies. But

the democratic and economic reforms required for European integration often are too painful to

implement. The democratic reforms, for example, require significant changes to Ukrainian politics,

changes that decrease the opportunities for exploitative, rent-seeking behavior by making Ukrainian

politics more transparent and accountable. The current unkempt state of Ukrainian politics is a source of

preserving power and wealth for the elites. Reform implies a loss of this power. In some ways, however,

economic reform is welcomed by the oligarchic groups. This is the case when businesses, such as for

example the SCM group, aim to register at the New York or London Exchange, and therefore are likely to

restructure their business operations to make them more conform European standards, In these

situations, closer EU integration benefits their businesses (Szeptycki, 2008, p. 45). Most of the economic

reforms required by the EU, however, are painful and need to be sustained. The rewards of European

integration are long-term, while the costs are often short term (Melnykovska, 2008, p. 2). There is a

mismatch between the long-term character of the EU requirements, and the short-term, pragmatic focus

of many of the oligarchic groups.

5.2. Peripheries of power Chapter 4 has shown that the Ukrainian ministry of foreign affairs (MFA) does not support the multi-

vectored stance towards foreign policy, as it strongly favors the western vector. The Ukrainian MFA is,

however, a very weak domestic actor. This is the case in many post-Communist countries, as in Soviet

times, foreign policy was often ‗directed from the center‘ of politics, and not primarily by the MFA

(Melnykovska, 2008, p. 7). Constitutional amendments of the last years have racked much foreign policy

formulation powers over to the NSDC and the presidential administration. This makes the relative

influence of the MFA on the formulation of foreign policy weaker than that of the presidency, the

presidential administration and the NSDC (Melnykovska, 2008, p. 7). This means that the interests of the

presidency and the circle around him prevail in the domestic bargaining process.

While the power of parliament has increased significantly since the constitutional changes of 2006,

parliament remains very sensitive to clientelism and corruption. These two phenomena are, according to

Zimmer (2006, p. 288), systemic components of neo-patrimonial states and societies. The Verkhovna

Rada of Ukraine is used by oligarchs and businessmen in the pursuit of their (economic) interests. Many

of the seats in the Rada are ‗bought‘ through party financing by oligarchic groups. Not only is a seat in

Ukraine‘s supreme political organ attractive because of the political power it renders, the parliamentary

immunity that accompanies a seat in the Rada is an attractive extra (Zimmer, 2006, pp. 290-291). The

result is that the Verkhovna Rada consists of many persons that originate in and/or have strong ties with

the same oligarchic groups mentioned before. Remember that Moravcsik‘s four sources of power are

initiative (power to put issues on the political agenda), the ability to influence institutions or procedures,

the access to political and technical information, and ideological power: the ability to justify and legitimize

certain ideas (1994, pp. 5-6). While it is clear that the Verhkovna Rada of Ukraine does possess the power

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of initiative and, to some extent, ideological power, the institutional powers of the Rada, i.e. the control

over the formal and informal procedures in Ukrainian politics, are primarily in hands of oligarchic groups

that permeate the Ukrainian parliament, by ‗buying‘ seats and thereby influence. The fact that even the

Rada is permeated by these groups makes it a platform wherein the same influential domestic actors exert

their power.

It is difficult to obtain a full picture of the Verkhovna Rada‘s voting behavior regarding foreign policy

preferences, as the official record does not show any (legislative) activities in the Rada with regard to

foreign policy (Verhkovna Rada, 2010). Moreover, party discipline in the Verkhovna Rada is quite weak,

which renders the ability of the party to affect legislator decision making equally weak. It is possible for a

legislator to more or less ‗steer his own course‘.17 These two factors make Rada voting behavior with

regard to foreign policy rather unpredictable and subject to change (Thames, 2004, p. 480).

As mentioned in chapter 4, the influence of Ukrainian NGOs on Ukrainian foreign policy is difficult to

separate from that of the oligarchic groups. A very large share of the NGOs have welcomed the increasing

financial support from political and economic actors in Ukraine, especially after the Orange Revolution.

This is due to the fact that many of the Ukrainian NGOs had very feeble financial resources. This might

sound strange, as the ENP specifically addresses the aims of strengthening and supporting civil society.

But applying for grants from the European Commission is a bureaucratic challenge that is too difficult for

many of the smaller NGOs. While many of these NGOs hope that the European Union will support the

NGOs more strongly in the future by using all the means that are offered to this end by the ENP

framework, the current flow of finance comes from oligarchic clans, from people such as Akhmetov and

Pinchuk, who are becoming increasingly involved in the NGO business (Stewart, 2009, p. 11-12). This has

consequences for the palette of NGOs in Ukraine, as these businessmen favor certain types of NGOs,

namely those NGOs that are not overtly critical of Ukrainian politics. The fact that the preferences of a

large share of the NGOs in Ukraine with regard to foreign policy are to a large extent a product of the

preferences of their patrons, wealthy businessmen and clan members, makes the relative bargaining power

of the NGOs to constrain the executive very dependent on the preferences of the oligarchic groups. An

example of such a ‗constrained NGO‘ is the Yalta European Strategy. This NGO officially aims ‗to

promote the development of a just, free and prosperous Ukraine, to open the country to the rest of the

world and to support Ukraine‘s membership to the European Union‘ (‗About YES‘, 2007). The Yalta

European Strategy remains, however, a ‗think tank‘ instigated by Viktor Pinchuk of the

EastOne/Interpipe clan.

The Orange Revolution showed that the NGO‘s do play a role for Moravcsik‘s fourth source of power,

the legitimation of ideas. Their rally on Kiev‘s independence square in 2004 made their accusations

17 Nevertheless, under the amended Constitution of 2006, legislators lose their seat if they change their party affiliation. The individual decision making power of the legislator thus remains restricted by the legislator‘s need to remain party member.

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regarding the undemocratic status of Ukrainian politics heard on television screens all around the world.

The subsequent disappointment when it became clear that Viktor Yushchenko was unable to keep his

promise to clear Ukrainian politics from oligarchic influence shows how the power of the NGOs in terms

of procedural access and monitoring capacity is very limited. Their monitoring power is lessened by the

influence of their wealthy patrons rooted in the oligarchic structures, who are not keen on supporting

watchdog NGOs. Their ability to influence procedures and institutions might increase with their current

backing by the oligarchic groups, who are quite powerful in influencing both formal and informal

procedures. However, this does mean a dependence on oligarchic groups to exert their ‗procedural

power‘, which will probably mean that NGOs will not be able to constrain the executive in ways not

supported by their patrons.

5.3. Ukrainian foreign policy and its positioning between East and West The multi-vectored nature of Ukrainian foreign policy thus seems to be a derivative of the foreign policy

preferences of the most influential actors the Ukrainian domestic bargaining process: the presidency and

its administration, the NSDC, and the oligarchic structures that permeate Ukrainian politics, amongst

other means through the informal political.

I have argued that the foreign policy formulation of these most influential domestic actors is based on

individual deliberations of costs and benefits of Ukraine‘s positioning by the different domestic actors,

concerning both domestic factors and foreign factors. The domestic factors that could influence foreign

policy preferences are, amongst others, the desires to secure political power and public support within

Ukraine. Foreign factors could be the search for energy resources or market access. Freire (2009, p. 234)

compares these deliberations with a mathematical formula, wherein ‗internal capacities, resources and

political will plus external threats and opportunities lead to multi-various policy options, where the end

result underlines the search for a maximalisation of gains‘. In Ukraine, the outcome of this formula is

multi-vectorism, which makes Ukraine an ‗in-between‘ country (Freire, 2009, p. 235). This diversified,

multi-vectored foreign policy is, according to Kuzio (2005c, p. 67), the product of suiting Ukraine‘s

foreign policy to the political objectives of the president and his allies. The current president Yanukovych

may use pro-Russian or pro-Western rhetoric, according to Kuzio (2005c, p. 62), but he does not support

integration with either Russia or the EU and NATO, as ‗integration of whatever type would deprive them

of monopolistic power (i.e. sovereignty)‘. While this statement of Taras Kuzio might be questionable, the

fact remains that the product of Ukraine‘s ‗formula‘ is multi-vectorism, as the multi-vectored approach is

favored by the most influential groups in Ukraine: the clans, but also the president (who derives his

preferences from his background in the Donetsk clan) and the close circles around him. Other fervent

supporters of multi-vectorism are Yulia Tymoshenko and her BYuT, the Pryvat clan, the Ministry of

Economy and European Integration and the NSDC (as explained in more detail in chapter 4).

Multi-vectorism is nothing new. In the country‘s ‗Guidelines for Ukrainian Foreign Policy‘, approved by

parliament in 1993, multi-polarity was reflected in the indecision between a pro-Russian course, a neutral

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course and a pro-European course (Semeniy, 2007, p. 124). Over the past years, Ukraine has been trying

to pursue a process of lessening its dependence on Russia, whilst attempting to build its own national

statehood. It has managed to keep at distance ‗uncomfortable alliances‘ with Russia‘s zone of influence

(Shmelova, 2008, p. 38). Nevertheless, Ukraine is still marked by high levels of foreign, notably Russian,

involvement in its domestic affairs (Kefferputz, 2009, online). Ukraine‘s multi-vector foreign policy

furthermore has not applied to its energy policy, as Ukraine remains entirely dependent on Russia in this

respect, not the least due to clever negotiations on Russia‘s part, promising artificially low gas prices in

exchange for keeping its fleet in Sevastopol, for example (Shmelova, 2008, p. 40). According to

Kefferputz (2009, online), Ukraine needs ‗to learn how to deal and co-operate with Russia without fearing

to become over-dependent on it‘, as a solid relationship between Ukraine and Russia is not only in

Ukraine‘s interest, but also in that of Brussels (Larrabee, 2006, p. 107). The economic benefits of

sovereignty have only started to sink in with most of the oligarchic structures in Ukraine (Dubnov, 2005,

online).

5.4. Conclusion This chapter has analyzed whose interests prevail in the Ukrainian domestic bargaining process. The

relative bargaining power of the different domestic actors has been assessed according to Moravcsik‘s four

sources of power: The ability to influence the initiation of policy, the ability to influence domestic

procedures, the ability to acquire knowledge on policies and subsequently monitor the executive, and the

ability of domestic actors to justify or legitimize policy (Moravcsik, 1994, pp. 5-6). This chapter has

assessed these sources of power in both the formal and the informal sphere, as Ukraine is characterized by

‗feckless pluralism‘, which means that informal and patrimonial relations permeate formal legal and

institutional structures.

This chapter has shown how the combination of a powerful presidency, on the one hand, and the blurring

of politics by oligarchic groups, on the other, has resulted in a domestic political situation wherein a few

powerful economic and political actors have access to Moravcsik‘s sources of power (initiative,

information, institutions, ideas), which enables them to significantly shape Ukrainian foreign policy. Their

favoring of the multi-vectored approach is thereby translated into Ukrainian foreign policy.

While Viktor Yushchenko announced an end to multi-vectorism when he became president of Ukraine in

2005, the country still wavers between the eastern and western vector today. The lack of interest in long-

term objectives by the oligarchic structures in Ukraine is expressed in a pragmatic multi-vectored

approach by the Ukrainian government, which is permeated by the same oligarchic structures. While the

European aspirations of some oligarchic groups such as EastOne/Interpipe are clear, actual steps towards

closer European integration (such as implementing democratic and economic reforms) are not taken

(Wolczuk, 2004, p. 5). This is partly due to the close links with Russian partners, but also because of the

short-term focus of the oligarchic groups. Reform is painful and its focus is too long-term. As Moravcsik

(1993) argued, in national preference formation on issues of foreign policy, economic interdependence

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with other countries as well as private economic interests are the primary determinants of national

preferences. In most cases, the rational choices made by national leaders are a response to constraints and

opportunities stemming from powerful economic constituents (Moravcsik, 1998, 18). In Ukraine, these

powerful economic constituents are the oligarchic groups, which are able to combine their economic

power with political power. Their use of informal political liaisons enables them to link the state

administration to the parliament, the political parties, the media and their businesses (Zimmer, 2006, p.

287).

Concluding, in the domestic bargaining process of Ukraine, the interests of a tight group occupying high

positions in both the political and the economic sphere have the highest relative bargaining power in the

Ukrainian domestic process. The presidency is very powerful, and benefits from ‗supporting institutions‘

such as the presidential administration and the NSDC. Because the president has a large role in shaping

these institutions, they have become powerful tools for the president to shape policy. Moreover, the

oligarchic groups have significant bargaining power in the Ukrainian domestic process, due to their access

to information, their monitoring capacity and their ability to influence decision-making procedures. The

presidency and the oligarchic groups are furthermore intertwined, as e.g. president Yanukovych is an

important figure in the Donetsk clan.

Multi-vectorism has marked Ukrainian politics ever since its independence in 1991. Indecisive public

attitudes towards the EU and Russia as well as Ukraine‘s dependence on both the EU and Russia have

stood at the basis of this multi-vectored foreign policy. The oligarchic groups, the presidency and the

biggest parties in parliament (Party of Regions, BYuT) strongly favor a multi-vectored approach to

Ukrainian foreign policy, as it suits their interests best to keep warm relations with both vectors, without

actually choosing one or the other. It has become clear that these groups are able to translate their interest

in this multi-vector policy into Ukraine‘s foreign policy decisions.

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6. To what extent does the ENP reflect the above insights?

In this chapter, I will try to define the mode of governance for EU-Ukraine relations, and look at whether

this mode of governance is appropriate for the case of Ukraine. As indicated in chapter 2, the formal

relationship between the EU and Ukraine is anchored in, amongst other policy measures, the European

Neighborhood Policy. The question to be answered in this chapter is whether the ENP is attuned to the

balancing act of Ukraine between East and West, and whether the ENP takes the particularities of

Ukraine‘s national preference formation process into account. In other words, this chapter aims to find

the answers to questions such as: Is Europe approaching Ukraine in the best possible way in order to

reach its goals of economic and strategic cooperation? Is the EU adequately dealing with the particular

foreign policy formation process of Ukraine?

This chapter will first elaborate on the four indicators set up in chapter 3 regarding the mode of

governance, in order to identify which mode of governance is in place. After these four indicators are

mapped, it is possible to assess what mode of governance is in place in the ENP. In the second section of

this chapter, I will assess whether this mode of governance of the ENP is effective, based on the empirical

data acquired in chapters 4 and 5 with regard to the particularities of the domestic bargaining process in

Ukraine.

6.1. Identifying the mode of governance of the ENP As explained in chapter 3, the analysis of the ENP towards Ukraine in this research is based on the

theoretical vocabulary offered by Lavenex and Schimmelfennig (2009). Lavenex and Schimmelfennig

define governance as ‗institutionalized forms of co-ordinated action that aim at the production of

collectively binding agreements‘ (Lavenex & Schimmelfennig, 2009, p. 795). External governance takes

place as parts of the acquis communautaire are extended beyond EU borders to non-EU member states

(Lavenex & Schimmelfennig, 2009, p. 796). Lavenex and Schimmelfennig identify three basic modes of

external governance: Hierarchical, network, and market governance, which are explained in more detail in

chapter 3. This chapter looks at whether the current mode of external governance of the EU towards

Ukraine, as embodied in the ENP, is effective, and whether there is room for improvement.

In order to identify which mode of governance is in place in the ENP towards Ukraine, the ENP will be

scrutinized along the four indicators as derived from Lavenex and Schimmelfennig in chapter 3. These

four indicators are (1) actor constellation, (2) the degree of institutionalization, (3) the mechanism of rule

expansion and (4) power relations and independence. This section will first elaborate on the first three

indicators as they apply to the relationship between the EU and Ukraine. As the fourth indicator,

moreover, power and in(ter)dependence relations will be discussed, which do not only involve the EU,

but also Russia.

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6.1.1. Actor constellation

As explained in chapter 3, the constellation of actors varies per mode of governance. Where in the

hierarchical mode the actor constellation is vertical, with tight forms of domination and subordination, in

network governance and market governance the mode of governance is more horizontal, and in that sense

more participatory and inclusive (Lavenex & Schimmelfennig, 2009, p. 795). Additionally, hierarchical

governance is more bureaucratic and less flexible than are network governance and market governance.

This section will assess the actor constellation in the EU‘s external governance policy towards Ukraine.

Given the sheer size and political and economic power of the EU as compared to Ukraine, one would not

expect the relationship between the EU and Ukraine to be perfectly horizontal. The method the European

Commission has chosen to implement the ENP does, however, proclaim a rather horizontal constellation

of actors. Actors in the ENP retain full sovereignty vis-à-vis the EU. Formally, the EU and Ukraine are

equal actors (Lavenex & Schimmelfennig, 2009, p. 797). Moreover, the EC aims to define the priorities of

the Action Plan together with the partner countries, Ukraine in this case. The AP is jointly agreed upon by

both the EU and Ukraine, and includes priorities for action in the short- and medium-term (Montanari,

2007, p. 4). The European Commission stresses that the ENP is mainly a bilateral policy between the EU

and the partner country, and offers a privileged relationship building upon mutual commitment to

common values (European Commission, EU/Ukraine Action Plan, 2005). The ENP Strategy paper

(European Commission, 2004) states very clearly that:

The EU does not seek to impose priorities or conditions on its partners. The Action Plans depend,

for their success, on the clear recognition of mutual interests in addressing a set of priority issues.

There can be no question of asking partners to accept a pre-determined set of priorities.

Monitoring of the progress takes place at the end of each year, thereby providing room for evaluation and

discussion. This monitoring also takes place on a bilateral basis (Melnykovska, 2008, p. 14). Moreover, the

AP should be adopted by joint institutions established by the Partnership and Cooperation Agreement.

‗Shared values and mutual understanding‘ play an important role in the ENP.

There are, however, five elements that make the relationship between the EU and Ukraine in the ENP

less horizontal than it might formally seem. This is due to the power asymmetry between the two actors.

Firstly, the EU has a deeply integrated and closed structure, according to Moroney (2002, ctd. in: Miller,

2003, p. 285). By offering enhanced relations and closer integration in this structure to Ukraine in return

for the effective implementation of reforms, the EU is able to use a material form of conditionality, tying

the financial assistance and the ‗carrot‘ of closer integration to reform achievements of Ukraine, which

puts the EU in a power position vis-à-vis Ukraine (Hakkaula, 2003, p. 18; Gänzle, 2008, p. 8; Gnedina,

2005, p. 17).

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Secondly, according to Hakkaula (2003, p. 18), the Commission‘s blueprint on the neighborhood policy

―Wider Europe‖/‖New Neighbourhood‖, written in 2003, does not give the European neighbors any say

in setting the agenda for European integration:

The objectives and means are non-negotiable; the only place where the partners would be

consulted is when the individual Actions Plans with clear benchmarks and timetables are being

agreed upon.

This blueprint ―Wider Europe‖/‖New Neighbourhood‖ (European Commission, 2003) states that the

benchmarks Hakkaula mentions in the above quote are primarily set by the Commission, and only

discussed with the partner countries where possible, ‗in order to ensure national ownership and

commitment‘ (European Commission, Wider Europe/New Neighbourhood, 2003). First and foremost,

the priorities in the AP need to fit the EU perspective defined in the ENP, as Hillion (2005, p. 6) argues.

The non-negotiation strategy that the European Commission pursued during the drafting of the Action

Plans with the partner countries, thirdly, fits uneasily with the proclaimed principles of ‗joint ownership‘

and ‗mutuality‘, and according to Wolczuk hints at a greater asymmetry between the actors than the

Commission likes to present (Wolczuk, 2006b, p. 189; Melnykovska, 2008, p. 14).

A fourth point that makes the constellation of the EU and Ukraine tilted towards a vertical relation is the

fact that although the relationship in the ENP between the EU and Ukraine might be formally equal, the

EU and Ukraine are engaged in a political and economic relationship that extends far beyond the ENP.

The economic balance between the EU and Ukraine is highly asymmetric. The European GDP (at official

exchange rate) amounted to $16.18 trillion in 2009, whereas the Ukrainian GDP amounted to $117.1

billion, and the EU is currently Ukraine‘s biggest trading partner (‗CIA World Fact Book Ukraine‘, 2010;

‗CIA World Fact Book European Union‘ 2010; European Commission, 2010a).18 The political relations in

the context of the ENP can also not be called equal. The EU decides which steps towards European

integration and EU membership will be taken with Ukraine, when, and how. So although within the ENP

the relationship between the two actors is equal, their relationship outside the ENP remains one of

inequality. One could add a fifth and final tool at the EU‘s disposal that makes the relationship between

the EU and Ukraine less horizontal, namely ‗passive leverage‘. This applies to the ‗power of attraction‘ that

EU membership embodies (Vaduchova, 2001, ctd. in: Melnykovska, 2008, p. 12).

Concluding, while the Action Plan is jointly agreed upon between the EU and Ukraine, the EU has five

related tools at its disposal that make the actor constellation tilted towards EU preponderance: (1) the

EU‘s power of setting conditionalities, (2) the power to set the objectives and means of EU-Ukraine

relations, (3) the non-negotiation strategy pursued by the EU during the drafting of the Action Plans, (4)

18 Ukraine has seen a fall in GDP of 15% in 2009, due to the global financial and economic crisis. EU-Ukraine trade fell by 45%, from over € 39.6 billion in 2008 to € 21.75 billion in 2009. Nevertheless, the EU remains Ukraine‘s number one trading partner (European Commission, 2010a).

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the asymmetry of EU-Ukraine relations beyond the ENP, and (5) the ‗power of attraction‘ of the EU. The

fifth reason can, however, be contested and is difficult to measure.

As mentioned in the above, the EU and Ukraine are formally equal in the ENP. This section has shown,

however, how frail this formal equality is in the context of the broader political and economic EU-Ukraine

relations. Nevertheless, mutuality and joint agreement remain vanguards of the ENP, which is the focal

point of this research. With regard to actor constellation in the ENP, one could argue that the network

mode of governance or the market mode of governance is in place. In both network and market

governance, actors are formally equal: ‗While they may differ with regard to their bargaining power or

competitiveness, none is subject to the will of the other. […] Actors have full autonomy to coordinate

themselves through the mutual adjustment of their actions‘ (Börzel, 2007, p. 4). But as the economic and

political relationship between the EU and Ukraine is not merely restricted to the ENP but extends to

numerous other areas (such as the economy, security, research), it cannot be argued that the actor

constellation is fully horizontal. The broader scope of EU-Ukraine relations is diagonal at least, tilted

towards the EU.

6.1.2. Degree of institutionalization

The second indicator of mode of external governance is the degree of institutionalization. As indicated in

chapter 2, in the hierarchical mode of governance, relations are highly institutionalized, with tight and

formal rules. Governance is exerted in the form of legislation, by defining authoritative and enforceable

rules for the partner country to abide by, and providing room for sanctioning the country should it not

abide by the EU rules (Lavenex & Schimmelfennig, 2009, p. 797). In network governance, the degree of

institutionalization would be medium-tight, wherein rules would be both formal and informal. The laws

are less binding than in the hierarchical forms of governance, and are based on mutual agreement. In

market governance, the degree of institutionalization of the EU-Ukraine relationship in the ENP would be

loose and informal (Lavenex & Schimmelfennig, 2009, p. 800).

The findings are that the ENP resembles a combination of both formal and informal rule, as it is

centralized and intensively monitored, while retaining soft or even vague elements. As elaborated in

chapter 3, the main objective of the ENP is to promote the mutual interests of the EU and its neighbors

with regard to reform, the rule of law, stable democracy, prosperity, security and stability throughout the

neighborhood of the EU (Linkevičius, 2008, p. 63). The instrument with which this extension of EU

norms is achieved is conditionality. While the Partnership and Cooperation agreements and Association

Agreements were ‗hard laws‘, legal contracts signed with partner countries, the ENP contains

predominantly ‗soft law instruments‘, the Action Plans, which vary per country and cover different policy

domains. These Action Plans are process-oriented, in the sense that they promote convergence to EU

standards by the ENP countries, while they do not stipulate specific ends, such as the complete adoption

of EU laws (Lavenex et. al., 2009, p. 820). Lavenex et al. (2009, p. 820) explain how the adoption of EU

norms is not a legal obligation but rather a political commitment by which Ukraine binds itself to the

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ENP. The commitments in the Action Plans are not extensively formalized and institutionalized but

rather vague, and are not precise obligations.19 This vagueness stems from the ‗approximation objective‘,

according to Lavenex et al. this means that the EU acquis must not serve as a model for the third country,

but can serve as a model (Lavenex et. al., 2009, p. 820). The legal setting of the ENP is therefore weak,

which indicates a low degree of institutionalization.

Nevertheless, provisions for monitoring on a regular basis are assured in the AP. Every 18 months, the

European Commission monitors the progress of Ukraine with regard to the Action Plan commitments in

the so-called Progress Reports, on the basis of which the EC can decide an ‗upgrade‘ for EU-Ukraine

relations (Sasse, 2008, p. 302). Moreover, the ministers of Ukraine meet on a yearly basis in Association

Council meetings. These meetings do not aim to align Ukrainian legislation to EU standards, but they do

aim to exchange information on the progress with regard to the Action Plan priorities. According to

Lavenex et al. (2009, p. 820), these discussions play a key role in monitoring and show that ‘the highest

political level wants to keep a grip on the development of the ENP, hence preserving the centralized

characteristics of the policy‘.

Aside from these centralized characteristics are the decentralized technical subcommittees. These

subcommittees are composed of civil servants of the ENP countries, the EC and the EU member states

and are aimed to discuss common priorities, encountered problems in implementation and possible

improvements. Due to the fact that the attendants are low-level civil servants and often are specialized in a

certain policy domain, Lavenex et al. (2009, p. 820) argue that these meetings have the potential to be

horizontal and symmetric, ‗based on technical expertise rather than political considerations‘. A review of

subcommittee documents that Lavenex et al. conducted, however, shows that some ENP countries send

higher ranking officials to these subcommittees, which might hamper the horizontal and symmetric nature

of these meetings. Among the instruments used in the ENP towards Ukraine are Twinning and TAIEX,

explained just below, which according to Lavenex et al. are informal networking mechanisms which are

another example of the decentralized nature of the ENP.

As mentioned above, in hierarchical governance there exist authoritative and enforceable rules for the

partner country to abide by, and there is room for sanctioning the country should it not abide by the EU

rules (Lavenex & Schimmelfennig, 2009, p. 797). The EU can use sanctions on ENP countries, such as

embargoes on EU products, banning the imports from Ukraine, restricting diplomatic contacts and

restricting the admission of persons on EU territory (Bosse, 2007, p. 46). The incentives of the ENP are

access to the EU internal market, and participation in EU programs and aid. The EU has never, however,

imposed sanctions on its neighborhood based on violations of human rights or democracy. While the

ENP uses elements of conditionality, the defining elements of conditionality, such as clear incentive and

enforcement structures, remain vague for both the EU and its partner countries (Sasse, 2008, p. 296).

19 It should be noted that the provisions on internal market and trade, however, are indeed precise and not vaguely formulated (Lavenex et. al., 2009, p. 820).

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Sasse (2008, pp. 296, 300) calls this ‗conditionality light‘, which is a process rather than a clear-cut variable.

Instead of providing a clear and consistent incentive structure, conditionality in the ENP is constantly

evolving, and highly politicized. ‗Rather than assuming its overarching existence, it needs to be dissected

by policy area, political context and the interaction between domestic and international actors‘ (Sasse,

2008, p. 300). The fact that incentive structures are vague and leave room for maneuvering renders,

according to Sasse, the ENP government, rather than the EU, the motor for change. It also shows that

the ENP is no example of clear hierarchical governance.

This indicator, the degree of institutionalization, shows that the market mode of governance is not in

place. In market governance, institutionalization is loose and informal. The formulation of common rules

is altogether avoided. The ENP towards Ukraine, however, is formally institutionalized in the Action Plan.

Priorities and sanctions are institutionalized and placed in a formal setting. While there may be informal

elements to the degree of institutionalization in the ENP towards Ukraine, one could not argue that it is

market governance, which would mean the absence of mutual recognition rules or other direct

institutionalized settings for rule transfer (Lavenex & Schimmelfennig, 2009, p. 799).

Concluding, the degree of institutionalization of the ENP shows a combination of elements of both

hierarchical governance and network governance. The hierarchical elements become clear in the fact that

the ENP does know an institutionalized setting, with formalized moments for monitoring which take

place at the highest political levels. Progress is unilaterally assessed by the EC in the Progress Reports,

albeit complemented by joint progress monitoring in the Association Councils. But the network mode of

governance, with medium-tight formal and informal rules, is also visible. The legal setting of the ENP is

weak, notably its core vehicle, the Action Plan. These Action Plans are not legal contracts but joint

agreements, and are process-oriented: They promote the convergence to EU standards by the ENP

countries (approximation), while they do not stipulate specific ends, such as the complete adoption of EU

laws. Moreover, the instruments of the ENP, such as the technical subcommittees, Twinning and TAIEX,

have a decentralized and informal nature, and potentially serve as a breeding ground for horizontal and

symmetric discussions. The ENP shows an institutionalized system of continuous horizontal co-

ordination of rules. This co-ordination is promoted by shared institutions such as the Association Council.

6.1.3. Mechanism of rule expansion

The criterion of the mechanism of rule expansion focuses on the way in which and the extent to which

EU rules and regulation are adopted in Ukraine. While in the hierarchical mode of governance the

relationship in the ENP would aim to result in a complete harmonization of Ukraine‘s rules with those of

the EU, the network mode of governance would lean towards policy co-ordination based on mutual

agreement, bargaining and discussion. The market mode of governance foresees an approximation of

legislation between the EU and Ukraine, not because this is agreed upon but because both countries

benefit from regulatory adaptations to each other‘s rules and standards (because of the proposed benefits

for trade this would imply) (Lavenex & Schimmelfennig, 2009, pp. 797-799).

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As indicated in the previous section, the ENP has the objective of ‗approximation‘ of ENP countries‘ law

with that of the EU. This means that there is no obligation to harmonize national law with that of the EU.

Rather, the EU acquis should serve as a model for guiding domestic reforms in ENP countries (Lavenex et.

al., 2009, p. 820). While there is no obligation, the EU and the ENP countries have the means at their

disposal to strive for an approximation of laws. The two most significant instruments are Twinning and

TAIEX, both tools borrowed from the Enlargement policy.

Twinning is a long-term technical support instrument, which was supposed to be one of the major tools

for institution-building in pre-accession assistance. It is extended to the ENP, and within this framework

Twinning facilitates a structure of direct cooperation between administrative units of the EU and Ukraine,

aimed at approximating Ukraine‘s law to that of the EU (Jesień, 2008, p. 2). Its long-term nature makes

Twinning primarily aimed at complex harmonization of national laws with the acquis. Twinning takes place

in a decentralized form, rather informally, linking civil servants of EU countries with those of ENP

countries (Lavenex et. al., 2009, p. 821). Where the harmonization is less complex, the EU and Ukraine

cooperate in TAIEX (Technical Assistance and Information Exchange Instrument), which is short-term

support, in terms of legal advice or to provide targeted policy. The informality of TAIEX is shown by its

form, which consists of workshops, seminars, conferences and training for Ukrainian public

administrative employees. Moreover, the TAIEX program sends experts from EU member states to

ministries or local governments ENP countries to provide aid in a specific reform task (Jesień, 2008, p. 2,

European Commission, 2010c).

These two instruments for the approximation of ENP country law with that of the EU point in the

direction of a network mode of governance. The informal and non-compulsory nature of cooperation in

TAIEX and Twinning resembles the description of informal networks by Sedelmeier and Schimmelfennig

(2005), in the sense that they are examples of ‗network qualities such as deliberative processes, co-

ownership, and density of interaction‘ (qtd. in: Lavenex & Schimmelfennig, 2009, p. 798). These network

qualities are likely to enhance the legitimacy of rules and are, according to Sedelmeier and Schimmelfennig,

favorable to their expansion.

While an approximation of laws also takes place in a market mode of governance, the reason why this

mode does not seem to be in place is the fact that the goal of an approximation of laws is agreed upon by

the EU and the ENP country. It is not enforced, but Twinning and TAIEX promote and strive for

approximation. In the ENP Action Plan for Ukraine, this is one of the official priorities for action:

‗Gradual approximation of Ukrainian legislation, norms and standards with those of the European Union‘

(European Commission, 2005). This agreement mismatches with the market mode of governance which

entails completely voluntary and de facto, not de jure, approximation of laws because both partners would

benefit from regulatory adaptations to each other‘s rules and standards. Mutual adaption anyhow is not

the case for the ENP towards Ukraine also because the EU is not adapting its acquis to Ukraine‘s laws.

One could argue in favor of the market mode of governance, however, that the approximation does take

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place due to the benefits this approximation could bring to Ukraine, for example concerning trade.

Notwithstanding the fact that there are benefits to approximation, however, the regulatory adaption takes

place in an institutionalized setting, wherein both the EU and Ukraine participate, and not purely in a

market setting. Another point that hints at the network mode of governance is the mode‘s characteristic

policy co-ordination based on mutual agreement, bargaining and discussion. Aspects of the ENP that

contribute to this are the technical subcommittees discussed in the previous paragraph, Twinning and

TAIEX.

Once again it is difficult to pin the ENP to a specific mode of governance with regard to this indicator.

On the one hand, the mechanism of rule expansion within the framework of the ENP shows many

features of the network mode of governance. Instruments such as Twinning and TAIEX are, as would be

the case in the network mode of governance, decentralized, focused on technical expertise, and are shared

institutions between the EU and Ukraine. The technical subcommittees and the focus on the

approximation of laws rather than the complete harmonization of Ukraine‘s laws with the EU,

furthermore, show elements of co-ownership and rather horizontal policy-coordination. On the other

hand, however, in this process of policy co-ordination and law approximation, the position of EU laws

and procedures is absolutely static: The EU does not approximate its law to that of Ukraine, and the EU

does not (or at least does not aim to) acquire expertise from Ukrainian administrative units. It is Ukraine

that is, in essence, supposed to be unilaterally molding itself to the EU model, approximating its laws to

the acquis. This one-way policy transfer comes closer to the hierarchical model. Moreover, the network

mode‘s characteristic of ‗policy-making without legislating‘ fits uneasily with the codification of laws that

takes place within the Twinning project, and resembles more the hierarchical model, in which the third

country unilaterally harmonizes with EU rules. The precision of these rules varies per sector, as Lavenex et

al. show (2009, p. 822). In transport and aviation, for example, the rules are very tight and precise, whereas

this precision lacks with regard to environmental policy. Concluding, the mechanism of rule expansion

shows a combination of the network mode of governance with elements of the hierarchical mode of

governance.

6.1.4. Power relations and interdependence

The final indicator for mode of external governance is that of power relations and interdependence. For

this fourth indicator, I will not only assess the EU and Ukraine, but also include Russia in my analysis. The

reason why it is added to this research is that the ENP does not exist in a political vacuum: The

effectiveness of the ENP towards Ukraine cannot be measured without looking at the broader

geographical and political context of Ukraine‘s foreign policymaking. Especially because this research

looks at Ukraine‘s positioning between the Eastern vector, Russia, and the Western vector, the EU, it is

important to at least briefly look at the broader political context of relations between the EU, Ukraine and

Russia. This section thus focuses on the more likely situation, wherein the EU and Russia are both

powerful, and Ukraine is weaker than both the EU and Russia. This requires us not only to look at

power- and interdependence relations between the EU, Ukraine and Russia, but also at the extent to

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which Russia can act as an alternative governance provider to the EU in the ENP towards Ukraine. What

alternatives to EU integration can it offer Ukraine? The power-based explanation suggests that external

governance is determined by the EU‘s power and its interdependence with regard to third countries as

well as competing ‗governance providers‘ in its neighbourhood and at the global level‘ (Lavenex &

Schimmelfennig, 2009, p. 803).

Market governance would be most likely if interdependence between the three countries were very high

and symmetric, with no dominant governance provider among the three, and with significant market

integration (Lavenex & Schimmelfennig, 2009, pp. 803-804). One could argue that this mode of

governance therefore is not in place, as Ukraine, despite its strategic position and market potential, is not

to be compared with great powers such as the EU and Russia (Freire, 2009, p. 245). A highly asymmetric

power relation between the EU and Ukraine in favor of the EU, with Ukraine being very dependent on

the EU (and not on Russia), would render the mode of governance hierarchical, as it would enable the EU

to force its rules upon Ukraine rather effortlessly, and Ukraine would have no alternative to turn to. It has

become clear in this research that this is not the case. Ukraine has shown in the past that it has the option

of an alternative ‗governance provider‘, namely Russia. An example of the alternatives Russia can offer to

European integration is the Single Economic Space (SES), an economic agreement proposed by Russia,

which could be an alternative to the economic advantages the EU embodies. Another way in which Russia

exercises its ability to play the role of ‗alternative governance provider‘ is through the energy and raw

material supplies Russia offers in exchange for political deals. The fact that Ukraine‘s big industries are

involved in mining and steel makes this last point especially important, as this makes Ukraine highly

dependent on raw material deliveries. This often compels the Ukrainian government to agree with certain

political deals with Russia, such as the agreement to leave the Russian fleet in Sevastopol until 2042. Even

if integration with Russia is not always Ukraine‘s favorite choice but sometimes a pragmatic decision, the

fact that there is an ‗alternative governance provider‘ means that the EU cannot afford to enforce its rules

and regulations too harshly. The EU must acknowledge that Ukraine does have alternative options with

regard to its foreign policy positioning, and will not merely accept the EU enforcing its rules on the

country. There remains a trade-off for Ukraine to make. This makes relations between the EU and

Ukraine somewhat more symmetric than is the case in the hierarchical mode of governance.

Of course the extent to which the power-relations between the EU and Ukraine are shaped by Ukraine‘s

relationship with Russia depends on the nature of Ukraine-EU and Ukraine-Russia relations, which are

not necessarily of the same kind. The main advantages of EU integration are access to European markets,

credits, technologies and assistance, but also security considerations play a role.20 The advantages of closer

cooperation with Russia reside in Ukraine‘s commercial trade relations with Russia, but predominantly in

the energy and raw material supplies Russia offers Ukraine, which is hit hard by the economic crisis and

cannot afford high energy prices to weaken its already feeble business sector (Wolczuk, 2004, p. 7).

20 According to Wolczuk (2004, p. 7), Euro-Atlantic integration of Ukraine in both the EU and NATO is a Ukrainian response to Russia‘s doubts regarding the legitimacy and viability of an independent Ukraine.

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The power- and interdependence relation between the EU and Russia is a subject far too complex to be

elaborated completely here. In order to get a view of the political context wherein the EU‘s external

governance in the ENP takes place, however, I will sketch in a nutshell the main features of the

relationship between the EU and Russia. As Aliboni (2005, p. 3) argues, the relations between the EU and

Russia are cooperative and are primarily based on bilateral agreements, such as the PCA of 1994, or the

agreement on the four Common Spaces of 2003. According to the latter,, the EU cooperates with Russia

in these common spaces: freedom, security & justice; external security; and research & education

(European Commission, 2010b). Another factor in the EU-Russian relationship is the European

dependence on Russian energy supplies. In 2007, 30.3% of EU-27 crude-oil imports originated in Russia,

and 40.4% of its imports of natural gas (Eurostat, 2010). Conversely, Russia is dependent on the EU. The

EU is Russia‘s dominant export market for energy, and its main trading partner. Russia is dependent on

European investments and technologies (‗Europe and Russia's Resources‘, 2006). 56% of Russia‘s exports

go to the EU. As a result of these strong mutual interests and interdependence, the EU and Russia

cultivate a partnership that remains mutually beneficial.

The EU outranks Russia in many points regarding its hard and soft power. The EU‘s economy combined

amounts to over 15 times the size of Russia‘s economy, while its population is 3,5 times the size of

Russia‘s, and its combined military spending 7 times bigger. In the UN Security Council, the EU possesses

three seats, two of which are permanent, compared to Russia‘s one seat. The trade balance between the

EU and Russia is also in the EU‘s favor: Russia imports only 6% of the EU‘s products, and supplies 10%

of the EU‘s imports, while the EU imports 56% of Russian total exports, and supplies 44% of its imports.

The EU remains very dependent on Russian gas supplies, but due to the lack of a pipeline towards China,

Russia remains highly dependent on the EU for its gas exports, at least in the short term (Leonard &

Popescu, 2007, p. 8). Nevertheless, Russia has been able to regain its position of great political power over

the last decade. Under Putin, Russia has effectively pursued a strategy of ‗divide and rule‘, as Leonard &

Popescu (2007, p. 13) argue, to deal with European countries not as a whole, but on a bilateral basis.

‗Russia has sought to bilateralise both its deals and its disputes with EU member states, putting a strain on

EU solidarity and making Russia the stronger power‘. Their research in the EU27 shows ‗a systematic

policy of coercive bilateralism that includes diplomatic pressure, trade embargoes, transport blockades and

early renegotiation of gas or oil supply contracts‘ (2007, p. 13). This has increased Russian influence over

the EU.

Both Russia and the EU follow ‗near abroad‘ policies which may clash on some points. As Aliboni (2005,

p. 13) posits, Russia is involved in crises with European partners in the northern Caucasus and

Transdniestria, while the EU in turn is trying to influence countries in Russia‘s former sphere of influence:

Ukraine and Belarus. Russia‘s near abroad policy possesses powerful and painful ‗sticks and carrots‘, as

compared to the ENP. It can offer Ukraine, amongst others, cheap energy, a visa-free regime, access to its

relatively open labor market, and an emergent goods market (Gatev, 2004, pp. 6-7). One of the powerful

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sanctions Russia can impose, furthermore, is to cut off Ukrainian energy supplies (Leonard & Popescu,

2007, p. 17). Meanwhile, the EU has been expanding eastwards, by offering financial aid and access to its

markets, in return for implementing the necessary economic and political reforms, as listed in the Action

Plans (Trenin, 2005, p. 2).

To what extent does Russia embody an alternative to the EU? Closer integration with the EU offers

Ukraine access to European markets, credits, technologies and assistance. The EU supports Ukraine in

economic and political reforms, aides in Ukraine‘s legislative approximation with the EU, and offered the

possibility of negotiating a free trade zone on the condition that Ukraine joined the World Trade

Organization. Ukraine joined the WTO in 2008, and negotiations on the Deep and Comprehensive Free

Trade Area (DCFTA) have been conducted in several rounds, and are supposed to continue in 2010.

Rather than maximizing its influence over the country by expanding in a ‗traditional‘ way, however, the

EU has refused to offer Ukraine membership (Trenin, 2005, p. 2). Russia, on the other side, has promoted

multiple treaties within the CIS that integrate the country more closely with Ukraine. These treaties cover

a wide range of issues such as terrorism, conventional weapons, and ethnic conflicts (Dimitrova &

Dragneva, 2009, p. 863). Moreover, Russia‘s promotion of the SES is aimed at closer economic

integration of Russia and Ukraine. But while Ukraine remains in negotiations with Russia on the SES,

Ukraine has also deepened its economic relations with the EU. According to Freire (2009, p. 246), this

indicates that the SES is becoming irrelevant for Ukraine‘s political economy, ‗visible in the light

involvement and scarce commitment within this framework, with the implications resulting regarding its

relations with Russia‘.

The strongest tool in Russia‘s instrumental palette to act as an ‗alternative governance provider‘ to the EU

resides in the energy sector. As mentioned before, Russia can impose full-scale energy blockades on

Ukraine, as it did in January 2006 and January 2009. Agreements on Russian energy supplies are often

‗held hostage‘ by political questions, as the agreement which let the Russian navy keep its base in

Sevastopol until 2042, or Ukraine‘s participation in CIS agreements. The debts Ukraine incurred vis-à-vis

Russia enable Russia to use this ‗commodity weapon‘, as Turczyñski (2005, p. 55) calls it, to force Ukraine

into agreements Russia wishes for. As Balmaceda (1998, p. 261) puts it:

Unless Ukraine is able to solve its energy debt question, it will be unable to take a firmer position

vis-à-vis Russian demands more generally, and will continually be forced into 'paying for its debt

with concessions' on the Black Sea Fleet and other areas.

Russia‘s opposition to Ukraine‘s NATO accession process is in some ways also a form of holding

Ukrainian politics hostage. In an interview with French television in 2005, Putin stated that if Ukraine

joined NATO, Russia would have to withdraw sensitive military equipment from its Black Sea Fleet in the

Crimea and terminate some co-operation with the Ukrainian defense sector (qtd. in: Trenin, 2005, p. 4).

One of the first things Yanukovych did as a president was to dissolve the committee occupied with

NATO accession.

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Now that the political context has been sketched, in direction of which mode of governance towards

Ukraine, then, does this fourth indicator point? After scrutinizing this fourth and final indicator of

external governance modes, the mode of governance of the EU towards Ukraine seems a combination of

hierarchical governance and network governance. The network mode of governance seems more

appropriate in the EU-Ukraine relationship, as the EU is compelled to bear in mind the possibility of

Russia as an alternative governance provider for Ukraine. This makes it impossible for the EU to impose

its wishes in a purely hierarchical mode. This section has shown that Russia takes on the role of alternative

governance provider to the EU in many aspects. It may not offer the same economic benefits as EU

integration does, but it remains a political and economic partner for Ukraine. Ukraine remains dependent

on Russian supplies of raw materials, especially due to Ukraine‘s big power industries that are involved in

mining and steel works. Russia can also play the role of ‗alternative governance provider‘ by virtue of its

ability to tie energy supplies to political issues. The ‗carrots and sticks‘ Russia has at its disposal, finally, are

more powerful in the short-term (as is the cutting off of gas) than the long-term benefits of European

integration the ENP embodies. The EU remains an economically powerful actor vis-à-vis both Ukraine

and Russia, but it cannot merely follow the hierarchical mode of governance. Although Ukraine‘s

relationship with the EU might be asymmetric, the significance of Russia for Ukraine renders the

hierarchical mode inapplicable. The market mode of governance is not applicable for Ukraine-EU and

Ukraine-Russia relations, as this would mean that there would be no clearly more or less dominant

governance provider in these relationships (Lavenex & Schimmelfennig, 2009, pp. 803-804). It can be

safely argued, however, that in both relationships, Ukraine gets the worst of it in terms of power.

Nevertheless, the network mode of governance is complemented by elements of the hierarchical mode of

governance, as there remains a power asymmetry between the EU and Ukraine. The EU can offer Ukraine

significant financial assistance and attractive benefits in exchange for closer cooperation. Ukraine remains

wary of overly close economic and political integration with Russia, as this entails not only more benefits

but also higher risks of incurring sanctions. European integration might be long-term oriented, its

prospects of access to credits, investments and technologies remain very attractive.

6.1.5. Mode of governance in the ENP towards Ukraine

The first part of this chapter has shown how the European Neighborhood Policy towards Ukraine reflects

the hierarchical mode of governance as well as the network mode of governance. Hierarchical

coordination, such as the precise monitoring moments and the sanctions the EU can impose on Ukraine,

is complemented by non-hierarchical, voluntary coordination, based on mutual agreement. The EU and

Ukraine make use of informal tools as provided by the ENP, such as TAIEX and Twinning, tools which

show the importance of co-ownership and interaction, hallmarks of the network mode of governance.

Another feature that resembles the network mode of governance is the attention for approximation of

Ukraine‘s legislation with the EU, rather than the complete adaption of the acquis. Table 6.1 shows the

conclusions as derived from the previous sections. The network mode of governance is reflected in the

ENP for all the indicators, due to the importance of mutuality and co-ownership of the ENP, at least on

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paper. The market mode of governance is relatively absent in the ENP towards Ukraine. The indicator of

actor constellation showed, however, support for both the market and the network mode of governance,

as the actor constellation was rather horizontal and actors are formally equal in the ENP, features of the

network mode as well as the market mode of governance. With respect to the other indicators, however,

the market mode of governance was clearly absent.

Nevertheless, all indicators showed that the network mode of governance is rarely performed on its own.

While formally, the EU and Ukraine might be equal actors in the ENP, the political and economic power

asymmetries between the EU and Ukraine render the relationship de facto asymmetric, which results in

manifestations of the hierarchical mode of governance in the EU-Ukraine relationship. Or, as Gänzle

(2008, p. 12) put it: ‗Ultimately, any negotiation between the European Union and each ENP country is

embedded in an asymmetrical power relationship which puts the EU in a superior position.‘

Mode of governance Indicator

Hierarchic Network Market

Actor constellation x xx xx

Degree of institutionalization

x xx

Mechanism of rule expansion

x xx

Power and interdependence relations

x x

Table 6.1 Overview of Mode of governance per indicator

Section 6.1.4 has elaborated on the political context wherein the ENP towards Ukraine unfolds, namely

the power and interdependence relationships between the EU, Ukraine, and Russia. It has been concluded

that the significance of Russia as an alternative governance provider renders it impossible for the EU to

follow a sheer hierarchical mode of governance towards Ukraine. Meanwhile, whilst the EU and Russia

come close to each other with regard to their relative power in this constellation, Ukraine comes off worst

with regard to its power vis-à-vis both actors. The EU might not be able to only follow the hierarchical

mode of governance due to the existence of the ‗alternative governance provider‘ Russia, it still remains in

a powerful position vis-à-vis Ukraine.

Börzel (2007, p. 13) argued: ‗The first thing that is striking about the EU is that while all three ideal types

of governance forms are present, they are hardly found in isolation.‘ This chapter has shown that this is

indeed also the case for the mode of governance of the EU towards Ukraine, as the indicators show that

the ENP towards Ukraine is a combination of hierarchical and network governance.

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6.2. Effectiveness of the ENP’s mode of governance In the first part of this chapter it has been established that the mode of governance of the ENP is a

combination of both hierarchical and network governance. In this second part, I will assess whether this

mode of governance of the ENP is effective, based on the empirical data acquired in chapter 4 and 5 with

regard to the particularities of the domestic bargaining process in Ukraine. In this section, I will argue that

the EU is approaching Ukraine with a combination of hierarchical and network governance, but fails to

optimally apply the modes. The ENP is vague and abstract on the end-goal of Ukrainian integration where

it should be clear and more ‗hierarchical‘, while it should pay more attention to co-ownership and

decentralization in those parts where it currently pursues a hierarchical course.

The ENP was created in order to secure and strengthen stability, prosperity and security for the EU and

its neighbors, by promoting economic and political reform, the rule of law and democracy (Linkevičius,

2003, p. 63). The question to be answered is whether the ENP is attuned to the balancing act of Ukraine

between East and West in order to achieve these goals, and whether the ENP takes the particularities of

Ukraine‘s national preference formation process into account.

This results in two questions: Is the ENP attuned to Ukraine‘s balancing act between East and West? And

is the EU adequately dealing with the particular foreign policy formation process of Ukraine, or is there

room for improvement? The following paragraphs provide answers to these questions.

Chapters 4 and 5 have shown how in Ukraine, the combination of a powerful presidency, on the one

hand, and the blurring of politics by informal processes and oligarchic groups, on the other, has resulted

in a domestic political situation wherein a few powerful economic and political actors have the ability to

influence the Ukrainian bargaining process. This enables these actors to significantly shape Ukrainian

foreign policy. The direction in which the most powerful actors have steered over the past years has been

one of multi-vectorism: An ambiguous whimsical path between East and West, indecisive with regard to a

certain direction in which foreign policy should take shape. Multi-vectorism has marked Ukrainian politics

ever since its independence in 1991. Indecisive public attitudes towards the EU and Russia as well as the

dependence of the Ukrainian economy on both the EU and Russia stood at the basis of this multi-

vectored foreign policy. The oligarchic groups, the presidency and the biggest parties in parliament (Party

of Regions, BYuT) strongly favor this multi-vectored approach to Ukrainian foreign policy, as it suits their

(commercial) interests best to keep warm relations with both vectors, without actually choosing one or the

other. Ukraine‘s diversified foreign policy approach has led to a troubled process of EU integration.

Despite the country‘s multiple declarations of its ‗European choice‘, for example, Ukraine has failed to

convincingly take the necessary steps in terms of reforms to actually pursue this European choice.

The roots of Ukraine‘s multi-vectored approach reside in the foreign policy preferences of the most

powerful domestic actors, as shown in chapter 4, but also in the nature of Ukraine-Russia relations, as

elaborated in the first part of this chapter. While Ukraine maintains a close relationship with Russia, Kiev

has shown that it definitely does not want to return to the ‗old days‘, wherein Russia dictates Ukrainian

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policy. The Ukrainian relationship with Russia is troublesome at times, partly due to the smarting

sanctions Russia can impose on Ukraine. The powerful hold of Russia on Ukraine makes the latter realize

that European integration has its merits for the sovereignty and stability of the country. This makes the

multi-vectored approach to foreign policy primarily a pragmatic decision (Linkevičius, 2008, p. 83).

The question is how the EU copes with the ambiguity in Ukraine‘s policy in the ENP, and to what extent

it anticipates the pragmatic nature of Ukraine‘s foreign policy. Moreover, the question remains whether

the power of informal forces in Ukraine is appreciated properly by the EU.

The discrepancy between Ukraine‘s ‗declarative‘ integration by rhetoric, on the one hand, and its feeble

implementation of the necessary reforms, on the other, remains difficult to tackle with the ENP. As this

research has shown, this discrepancy is rooted in domestic factors and their ambiguous attitudes towards

Ukrainian foreign policy. As Wolczuk (2008, pp. 87-88) argues, the actual impact of the ENP to mobilize

Ukrainian politicians has been relatively limited. European integration not only remains very abstract, it

has also been the occupation of many lower-level bureaucrats, rather than mobilizing the political leaders.

Politicians find it difficult to explain the exact benefits of the ENP, which are rather uncertain, according

to Wolczuk (2008, p. 106). The ‗finalité‘ of EU integration remains unclear, as the prospect for relations is

defined as ‗more than cooperation but less than integration‘ (Wolczuk, 2008, p. 107).

The ENP‘s attractiveness is, according to Wolczuk, furthermore decreased due to the lack of the prospect

of membership: ‗The incentive of inclusion in the internal market – the key ‗‘carrot‘‘ of the ENP – though

generous from the EU‘s point of view, falls short of the expectations of the Ukrainian elites and society,

given already existing expectations‘ (Wolzcuk, 2008, p. 88). The ENP clustering Ukraine in a group with,

amongst others, Morocco, Azerbaijan and Jordan, has been a disappointment for many Ukrainian citizens

and politicians. This is an important problem in the EU‘s approach towards Ukraine, as by making the

ENP a process in which political and economic transition have become a goal in its own right, the EU made

the ―journey‖ of transition itself the reward (Gänzle, 2008, p. 4). This makes the ENP an open-ended

process, which seems to be cultivating the existing ambiguity towards foreign policy in Ukraine. The EU is

not able to tackle the problem that Ukraine‘s highly ambivalent foreign policy is inspired by pragmatic

motives, which leads to an indecisive foreign policy palette that is neither shutting the door towards

European integration, nor striving for it in a proper way. The choice for multi-vectorism, in some ways an

attempt to benefit from both East and West, is cultivated by the ENP as the ENP does not offer a clear

prospect of membership, nor does it offer a clear vision on how to continue the EU‘s relation with

Ukraine (Linkevičius, 2008, p. 72).

One could argue that as the EU is not offering any membership prospect to Ukraine, Ukraine misses the

incentive to proceed with implementing policy changes, and misses the political will (in both the formal

and the informal sphere) to consistently pursue European integration. And especially political will is

needed to overcome the focus on business interests. As argued in chapters 4 and 5, oligarchic groups in

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Ukraine are not too eager to be involved in the accountability and transparency measures that the

approximation of Ukrainian law to European standards unequivocally brings about. While the financial

assistance and market access, on the one hand, are highly lucrative, the laws and regulations regarding

transparent business are not met with enthusiasm by the oligarchs, who are simply not used to earning

their income in a legally restricted market economy (Molchanov 2004, p. 454). As a full-fledged

implementation of all the painful reforms in Ukraine still seems to result in the status of Ukraine as non-

candidate ‗partner‘, and not as a member or future member, the motivation to implement these painful

seems to be unable to find. To quote Linkevičius (2008, p. 81): ‗The EU-Ukraine ―strategic partnership‖ is

an unfortunate example of a relationship between two sides pursuing very different agendas‘. If the EU is

not choosing for Ukraine, why should Ukraine choose the EU?

One should not conclude, however that the ENP is not making a difference. According to Wolczuk

(2008, p. 88), some of its success is rooted in the fact that the AP of the ENP finally offers Ukraine a

concrete guideline and focus for domestic policy-making. Linkevičius (2008, p. 77) similarly argues that,

although there might have been disappointments with regard to the prospects the ENP offered, Ukraine

accepted the ENP as a transitional framework for the short- and medium-term. The EU has tried to

safeguard the mutuality of the ENP, to ensure that the ENP and the Action Plan are agreed on a bilateral

basis, making it a product of both the ENP country as well as the EU, focusing on their mutual interests.

Nevertheless, the ENP as a policy tool for the EU towards Ukraine to achieve the goal of promoting

reform, the rule of law and democracy remains rather weak. This is, according to Melnykovska (2008, p.

2), due to the vague incentives, the long-term character of its benefits compared to the short-term costs of

reforms, the absence of concrete sanctions and the assumption of the EU that Ukraine possesses solid

administrative capacities whilst these are lacking.

As argued in chapter 4, the motives for rapprochement with either the EU or Russia for many of the

domestic actors in Ukraine are often economic and political, such as the securing of cheap energy from

Russia and the access to European markets, but also the preservation and continuation of political power.

Most of these motives are short-term. As Wolczuk (2004, p. 4) has argued, the short-term focus originates

in the fact that many of the nomenclature are more occupied with assuring and continuing their own

power-positions in the short term. This explains why the many of the calls for European integration have

not been met by actual policy reform in the democratic and economic realms: Many domestic actors like

the European project and see many benefits in it, but the sustained long lasting process of reform that is

required to obtain more complete EU integration seem too high a sacrifice. The discrepancy between

short-term costs and long-term rewards is an important problem, as it adds to the ‗motivational issues‘

many of the key players in the Ukrainian foreign policy process face.

Another shortcoming of the ENP has to do with its conception of EU-Ukraine relations in the context of

EU-Russia and Ukraine-Russia relations. As argued in the first section of this chapter, Ukraine‘s multi-

vectorism is not only the product of the oligarchic business preferences. Ukraine is balancing between

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East and West partly because of the nature of dependency on Russia, which remains a central pillar in

Ukrainian foreign policy. Ukraine is, in the words of Freire (2009, p. 233), ‗looking West while not

overlooking its Eastern neighbor‘. In the ENP, no priority considerations have been formulated,

according to Linkevičius (2008, p. 83), with regard to this balancing act. There has not been much effort

‗to elaborate a comprehensive strategy towards Russia and Ukraine which would take into account the

current situation in both countries and the complicated relations between the two states‘.

Finally, as argued in chapters 4 and 5, the Ukrainian foreign policy preferences are not merely a product of

the wishes of the government, nor of the parliament. In Ukraine, a complex and obscure structure of

intertwining formal and informal politics result in a domestic political situation wherein a few powerful

economic and political actors have the ability to influence the Ukrainian bargaining process. By pursuing a

pure hierarchical mode of governance towards Ukraine in some elements of the ENP (as some elements

of the ENP clearly feature a network mode of governance), the EU conducts its negotiations with only

the formal element of Ukrainian politics. And while formally, Ukrainian presidents such as Kuchma, but

also the current president Yanukovych, may argue that European integration is one of their strategic goals,

the shoe pinches not above the surface, but in the subliminal political processes. It is in these spheres that

the oligarchic groups might welcome European integration in some respects, notably in the financial

benefits it may incur, but they remain resistant to the long lasting process of reform that is required to

obtain fuller EU integration. It is for this reason that the European choice of Ukraine has remained

shadowed by a reluctance to reform. The EU‘s approach to Ukraine in the ENP shows a misconception

of these informal powers that shape Ukraine‘s positioning behavior. This is most visible in the EU‘s use of

its tools, both positive (in terms of benefits of integration) as well as negative (sanctions). By making the

positive tools, the carrots, only lucrative in the long-term (access to a free trade area to be negotiated in a

time-span of several years, for example), the EU fails to motivate the business interests, which remain very

pragmatic and short-term focused. The EU should instead recognize how important these business

interests, which operate in the informal sphere of politics, are for the formulation of Ukrainian foreign

policy, and adjust its tools accordingly.

In short, the ENP towards Ukraine shows four main shortcomings:

I. By making the ‗journey the end-goal‘ for Ukraine through not offering any prospect of EU

membership, the ENP fails to mobilize pro-European Ukrainian politicians who have been

disappointed by the restrained goals of the ENP. This results in a failure to generate sufficient

political will to stand up against those interests that prefer to see EU integration remaining at distance,

perhaps because of their fear of the transparency and accountability requirements that come along

with EU membership. This reinforces Ukraine‘s multi-vectored stance.

II. The instruments of the ENP do not pay enough attention to the importance of informal power in

Ukraine, whose bearers may see benefits in the European project but remain wary of the sacrifices

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they will have to make for European integration, and the consequences of it for their wealth and

power.

III. The ENP fails to formulate a comprehensive strategy towards Russia and Ukraine that takes into

account the complex relationship between the two countries.

IV. The incentives of the ENP are vague and long-term while the costs of reform are short-term, and lack

concrete gains should Ukraine abide by the required reforms. This drives many domestic actors to

occupy themselves with assuring and continuing their power-position in the short-term, instead of

pursuing painful democratic and economic reforms.

6.3. Conclusion In this chapter it has been established that the mode of governance for the ENP towards Ukraine is a

mixture of the hierarchical mode of governance and the network mode of governance, but the

combination in the ENP is not optimal. The hierarchical mode of governance is apparent in the precise

monitoring of the progress, as well as the availability of sanctions the EU can impose on Ukraine. The

non-hierarchical, more voluntary network mode of governance is visible in the use of informal and

decentralized tools such as TAIEX and Twinning, which allow for cooperation between the EU and

Ukraine based on mutuality and co-ownership due to their informal and more technical nature.

The second part of this chapter has assessed whether the ENP towards Ukraine is effective in order to

reach the goal of securing stability, prosperity and security by promoting political and economic reforms. I

have shown that while the ENP towards Ukraine may have had some success in terms of providing a

transitional framework towards Ukraine with guidelines for domestic policy-making, it still bears four

flaws, concerning (1) its failure to mobilize pro-European politicians and to generate political will to

actually pursue reforms, (2) its insufficient attention for informal power structures, (3) insufficient

attention for Ukraine‘s complicated relationship with Russia, as well as (4) the absence of clear incentives

and a unfortunate harmony between long-term rewards and short-term costs. The problems of the current

effectiveness of the ENP reside in the fact that the mode of governance in the ENP is an unfortunate

combination of both hierarchical and network governance.

Based hereupon, I can conclude that a preferable balance in external governance towards Ukraine would

be an approach largely shaped by using the decentralized tools and attention for co-ownership of the

network mode, and the incentive-structure elements of hierarchical governance. As mentioned before,

modes of governance are hardly found in isolation. The reason why it is proposed here that the EU

should approach Ukraine by using both network and hierarchical governance is that a good combination

of both can optimize the ENP towards Ukraine. A good combination here means a combination of

network elements and hierarchical elements that acknowledges the particular situation of the Ukrainian

foreign policy-making process. Just below I explain how two of the four problems of the ENP towards

Ukraine could be embarked upon by using elements of the network mode of governance, while the last

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problem of the ENP is properly tackled by the hierarchical mode of governance. The third problem is of a

nature not easily tackled by using a different mode.

The power asymmetry between the EU and Ukraine might not completely match with the network mode

of governance, but this asymmetry is difficult to evade in a situation when a single country cooperates

with a community of countries. As Gänzle (2008, p. 12) posited: ‗Ultimately, any negotiation between the

European Union and each ENP country is embedded in an asymmetrical power relationship which puts

the EU in a superior position.‘ Power asymmetries can exist in the network mode of governance,

moreover, according to Lavenex and Schimmelfennig (2009, p. 797), and do not make the relationship

necessarily hierarchical.

With regard to the first problem, the advantages for the EU in pursuing a network mode of governance

towards Ukraine are not only the co-ownership of policy which is being promoted by the more equal

relations, but in the case of Ukraine also the decentralized and technical nature of the network mode. By

making use of decentralized, specialized governance institutions such as policy networks, agencies and

committees, the cooperation between the EU and Ukraine can become more process oriented. This

enhances the legitimacy of the priorities and points for action created in the ENP, and is conducive to

their actual implementation and expansion. This may play an important role in mobilizing politicians and

generating political will in Ukraine to actually pursue the implementation of economic and political

reforms (Schimmelfennig & Sedelmeier, 2005, qtd. in: Lavenex & Schimmelfennig, 2009, p. 798).

With regard to the ENP‘s second limitation, the insufficient attention for Ukraine‘s peculiar political

situation in which informal power structures are very dominant, the decentralization that characterizes the

network mode of governance would enable the EU to focus the ENP not only on the government, or the

executive in Ukraine, but also more on those actors in Ukraine that can (potentially) play a serious role in

the domestic bargaining process, such as the NGOs, the political parties and the oligarchic groups. This

does not mean that the EU should involve itself in direct negotiations with the heads of the oligarchic

groups, but rather that the EU in its approach towards Ukraine should be aware of the influential role of

these groups, and of the biggest obstacles these groups see in the process towards integration. Proper

insight into what drives these groups to favor an indecisive approach to foreign policy is thus important.

Even-handed support to the NGOs is crucial to ensure that Ukraine is evolving as a pluralistic country,

which could diminish the long-term erosion of Ukrainian democracy (Vahl, 2004, p. 5).

The third problem, the insufficient attention for Ukraine‘s complicated relationship with its neighbor

Russia, is not a problem that can be tackled merely by pursuing a certain mode of governance, as it does

not require a different approach, but requires above all greater insight into Ukraine‘s relationship with

Russia, with regard to its energy dependence, its economic dependence but also with regard to its cultural

affiliation with Russia.

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While the first and second problem might be overcome by pursuing a less hierarchical, mutual approach

towards Ukraine, the fourth problem of the vague incentive structure of the ENP requires elements of

hierarchical governance. A clearer incentive structure that would be both short- and long-term could offer

Ukraine greater motivation to actually implement the painful reforms needed for closer EU integration.

The actors that currently make cost-benefit calculations of the benefits of EU integration are often held

back by the short-term costs and the long-term nature of rewards. A greater balance in the incentives

could create a greater willingness for EU integration. Conversely, the EU should be more firm when

Ukraine does not meet the ENP priorities. While worldwide, 56% of the EU‘s sanctions have been

invoked to protect democracy and human rights, the EU has not imposed any sanctions of this sort on

Ukraine (or any other country in its neighborhood)(Bosse, 2007, p. 46). A clearer incentive structure

should also mean more consistency in sanctioning. This would render the actor constellation more vertical

and more institutionalized, both features of the hierarchical mode of governance.

In sum, in order for the EU to adequately deal with the particular foreign policy formation process of

Ukraine, one could argue that it would be better for the EU to tilt its mode of governance more towards

the network mode, rather than the hierarchical mode. Nevertheless, hierarchical elements remain vital for

the success of the ENP. By making use of decentralized approach and specialized governance institutions

of the network mode, complemented by a clearer incentive structure of the hierarchical mode, the ENP

towards Ukraine as a policy of external governance can become more effective.

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7. Conclusion

This research has acquired insights on Ukraine, its positioning between East and West and the EU‘s policy

towards Ukraine. Its findings can be summarized in three parts: an empirical part, a policy analysis part

and a theoretical part.

The empirical part of this research took Ukraine‘s balancing act between the EU and Russia as its point of

departure. It has tried to explain why Ukrainian foreign policy and its subsequent positioning between the

Eastern and Western vector is the way it is. This knowledge has been acquired by using the theoretical

framework of the liberal intergovernmentalist approach to assess what the main domestic actors in

Ukraine are, and how these domestic actors shape Ukrainian policy and thereby its positioning between

East and West. The second section of this research consisted of a policy analysis of the ENP, as this

research looked at the extent to which the European Neighborhood Policy towards Ukraine is correctly

adjusted to the country and its specific policy making process. It furthermore assessed how the EU‘s

policy towards Ukraine could be improved.

In this final chapter, I will elaborate on these three aspects of this research in turn: First, I will look at the

empirical aspect of this research, the assessment of Ukraine‘s domestic bargaining process, using liberal

intergovernmentalism as a toolbox. Thereafter, I will summarize the findings regarding the ENP towards

Ukraine, and provide some policy recommendations based on these findings. Finally, I will return to my

research question, and attempt to embed the findings of this research into the broader theoretical

framework of liberal intergovernmentalism.

7.1. Empirical findings: Ukraine’s domestic bargaining process and foreign

policy preferences

This research has analyzed the domestic bargaining process in Ukraine. Important in this analysis has been

the use of liberal intergovernmentalism. Liberal intergovernmentalism posits that national interests are not

merely dictated by international anarchy and distribution of power, but are the product of policy goals

determined by the domestic political system. Therefore, the foreign policy goals of a country vary in

response to shifting pressures from domestic interest groups (Moravcsik, 1993, p. 481). Foreign policy

preferences and the subsequent positioning between the EU and Russia have been operationalized here as

preferences which indicate either willingness to make the steps necessary for closer integration with the

European Union, or steps aimed at closer political and economic integration with Russia (Larrabee, 2006,

p. 93; Kuzio, 2006, pp. 89-90). By making an assessment of the domestic interest groups competing for

political influence, and the national bargaining process of Ukraine, I have been able to map the Ukrainian

policy-making process on foreign policy issues, which makes it possible to explain and predict Ukraine‘s

positioning between East and West.

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This empirical research showed that soon after independence, Ukraine, by virtue of President Leonid

Kuchma, already articulated its desires of integrating with the European Union. What has become clear,

however, is that Ukraine has failed to move beyond declaring it wants to become an EU member, towards

actually designing and implementing policies aimed at the necessary democratic and economic reforms. It

is for this reason that the period of European embrace of the mid-1990s was followed by a cooling down

of relations, culminating in the European Neighborhood Policy towards Ukraine, wherein the prospect of

membership was (at least for the medium term) withheld and replaced with Ukraine having the status of

‗mere neighbor‘.

Three important features of the Ukrainian domestic bargaining process have stood out in this research,

which enable us to explain Ukraine‘s positioning between East and West:

The centrality of the presidency;

the dominance of informal politics in the Ukrainian political system;

the pragmatic considerations in the domestic bargaining process.

Together these factors lead to a supremacy of ‗multi-vectorism‘ with regard to Ukraine‘s foreign policy

positioning.

Centrality of the presidency

Although the powers of the presidency have diminished significantly with the constitutional changes of

2006, the presidency remains the central locus of power in the Ukrainian political system. This is partly

due to the leverage the president has over two other powerful actors in the domestic bargaining process

and the formation of foreign policy: the National Security and Defense Council (NSDC) and the

presidential administration. These two executive bodies are centers where many of the foreign policy

decisions are taken, and they operate under the direct supervision of the president. Actors that might

otherwise be dominant actors in the formation of foreign policy, such as the Ministry of Foreign Affairs,

are weak in Ukraine, as many of the foreign policy-making powers are transferred to the NSDC and the

presidential administration.

By virtue of his constitutional powers, the president has come ‗to overshadow other branches of power,

and neutralize most efforts at introducing effective ―checks and balances‖‘ Wolczuk, 2004, p. 3). The

current president Yanukovych, inter alia due to Putin‘s support for him during the fraudulent elections of

2004 and his reluctant stance towards Ukraine joining NATO, has the image of favoring the Russian

vector in foreign policy. The Kremlin has reacted assertively to his ‗pro-Russian‘ orientation, taking steps

aimed at integrating the Russian and Ukrainian economy (e.g. with the ‗Single Economic Space‘).

Meanwhile, Yanukovych has argued that he prefers Ukraine to be ‗a bridge between East and West‘, and

mentioned that Ukraine will choose a foreign policy that will allow it ‗to get the most out of the

development of equal and mutually beneficial relations with Russia, the EU, the US and other countries

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that influence development in the world‘ (‗President Viktor Yanukovych's address to the Verkhovna Rada

of Ukraine‘, 2010). This ambivalent positioning will be explained by the following two points, but it is

important to note that the position of the president, due to his vast powers, is a determining factor in

Ukraine‘s positioning. The centrality of the president thus must be included in any explanation of

Ukraine‘s wavering between East and West.

The dominance of informal politics in the Ukrainian political system

Moravcsik (1994, p. 4) defines power in the domestic bargaining process as the power to constrain the

executive. An important finding in this research is that in Ukraine, this power is to a large extent exercised

through informal political processes, which have a significant role in the domestic bargaining process.

Ukraine shows a domestic political situation wherein political rule is exercised within a formal structure

and ‗with the claim to rational-procedural bureaucracy and modern statehood‘, while the political and legal

systems are permeated by a patrimonial system of personalized rule, ‗based on loyalties and material

incentives and rewards‘ (Zimmer, 2006, pp. 284-285). This means that formal institutions and political

relations do not capture the informal essence of Ukrainian politics, which is characterized by a permeation

of politics by informal processes, which intertwine the legal and institutional infrastructure of Ukraine

with informal and patrimonial relations. This is expressed most clearly by the dominance of oligarchs in

the Ukrainian domestic political system, who through patrimonial and informal structures of loyalty have

come to permeate politics. These oligarchs are directly involved in political life, as this is perceived as a

precondition for conducting business. Moreover, the influence of the oligarchs comes to show in the

‗frequent bending or outright violation of the laws, of influencing legislation so that it is in line with their

particular interests‘ (Szeptycki, 2008, p. 43).

Oligarchic groups have penetrated the highest ranks in the Ukrainian political system and acquired

political positions in Ukraine that enable them to co-shape foreign policy. They possess important political

resources Moravcik described: The power of initiative (agenda-setting) through their seats in parliament

and influence over political parties; procedural power, as their power positions render them a significant

influence over political institutions and the policy-making process; they have cognitive power through

their access to political and technical information, and they possess the ability to justify specific polices,

due to their dominant presence in both the political and the economic scene and the media.

Oligarchs in Ukraine operate through different clans. This research has elaborated on the four biggest and

most influential clans: the Donetsk clan, the two Dnepropetrovsk clans and the Industrial Union of

Donbass clan. It has also assessed the powers of the Kiev clan, which has lost power after the Orange

Revolution. The oligarchs became politically involved during the Kuchma presidency. The first years of

Ukrainian independency were a period of intense privatization and economic liberalization projects, a time

when the economic elites were able to translate their economic into political power. As president Kuchma

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rewarded the oligarchs with privileges, an oligarchic system emerged and consolidated (Puglisi, 2008, pp.

57-58). The clans have tight relations with the presidency and the circles around the president.

But the permeation of informal power in the political process is not merely due to the oligarchs. The

Ukrainian domestic institutional structure shows that the power of the judiciary is weak, and the

parliament is prone to be used as a forum for managers, entrepreneurs, lobbyists and industrial actors to

promote their own interests (Zimmer, 2006, p. 290). Moreover, civil society in Ukraine is also permeated

by oligarchic influence. As obtaining EC or other international grants requires a difficult bureaucratic

process, many NGOs in Ukraine have become another lieu for oligarchs like Rinat Akhmetov and Viktor

Pinchuk to exert their power, as they provide easy money for the NGOs that enhance their image. This

results in a weakening of NGOs with a watchdog function, as the oligarchic structures naturally do not

favor strong monitoring agencies in their country. In all, Ukraine shows different elements that render it

impossible to classify the country as a democracy ―proper‖.

Pragmatic considerations in the domestic bargaining process

This research has argued that the foreign policy preferences of the most influential domestic actors in

Ukraine are based on individual deliberations of costs and benefits of Ukraine‘s positioning by the

different domestic actors, concerning both domestic factors and foreign factors. I have shown that the

clans and their leaders may have different ideological preferences when it comes to Ukraine‘s positioning

in the long-term. What the clans have in common, however, is their pragmatic view on Ukrainian foreign

policy. Many of the oligarchs are more occupied with assuring and continuing their own power-position

and welfare in the short-term. Their big influence on the Ukrainian political system results in political

reforms that have been ‗self-serving‘ at times (Wolzcuk, 2004, p. 4). But most importantly, the pragmatic

and short-term focus in their approach to foreign policy making renders Ukraine‘s foreign policy

positioning highly ambivalent. The reasons for their favoring balancing between East and West are that

the economic relations between Ukraine and Russia are of vital importance for the viability of their

businesses, as the bulk of their gas and other natural resources come from Russia. At the same time,

however, the economic benefits of integration with the EU, such as access to the European markets,

investments and technologies, are also valued. Pragmatic considerations thus result in compromising

between the eastern and western vector. This leads to a preference for ‗multi-vectored‘ foreign policy: Not

choosing either the eastern or the western vector provides a way for the oligarchic groups to pursue their

own economic interests, benefiting from relations with both vectors. Multi-vectorism essentially means

neither choosing the western or the eastern vector, but keeping good relations with both.

While Yushchenko announced an end to multi-vectorism when he became president in 2005, Ukraine still

wavers between the eastern and the western vector today. The problem is that this ambivalence results in

an uncertain commitment in Ukrainian foreign policy, towards both the EU and Russia. The efforts of

Russia to create a Single Economic Space, for example, are being hindered by Ukraine‘s doubts about the

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project. At the same time, integration with the EU is hindered by the reluctance of Ukrainian politicians to

reform, as some of them and many of the powerful oligarchs gain from the current meager institutional

and political transparency: Intransparency facilitates corruption and rent-seeking, which in turns renders

them wealthy and powerful in the political process.

This research has also argued that Ukraine‘s multi-vectored course is in part due to the European refusal

to offer Ukraine an alternative to multi-vectorism, as will be summarized in the policy analysis of the ENP

below.

7.2. Policy analysis and policy recommendations

In chapter 6 the ENP has been analyzed by assessing the extent to which the ENP is attuned to the

balancing act of Ukraine between East and West, and whether the ENP takes the particularities of

Ukraine‘s national preference formation process into account. This analysis was based on the theoretical

vocabulary of Lavenex and Schimmelfennig (2009), who identify three basic modes of external

governance: hierarchical, network, and market governance. Briefly summarized, hierarchical governance is

governance exerted in a formalized relation of domination and subordination, with precise rules and

procedures and the extensive use of monitoring and sanctioning. In network governance, actors are

formally equal, in a relation that consists primarily of voluntary agreement and cooperation in a framework

of medium-tight degrees of institutionalization and a promotion of co-ownership. Market governance is

the least formal mode, wherein policy outcomes are the result of competition between independent actors,

which can lead to a de facto harmonization of legislation (Lavenex & Schimmelfennig, 2009, pp. 798-800).

In order to identify which mode of governance is in place in the ENP towards Ukraine, I have scrutinized

the ENP along four indicators derived from Lavenex and Schimmelfennig: actor constellation, the degree

of institutionalization, the mechanism of rule expansion, and power relations and interdependence. Based

on research with regard to these four indicators, I have shown in chapter 6 that the ENP reflects both the

hierarchical mode of governance as well as the network mode of governance, but is currently not

employing these modes in the most effective way.

Problems

The problems with the current effectiveness of the ENP reside in the fact that the mode of governance in

the ENP is an unfortunate combination of both hierarchical and network governance. Chapter 6 has

shown that while the ENP towards Ukraine may have had some success in terms of providing a

transitional framework towards Ukraine with guidelines for domestic policy-making, it still bears four

flaws, concerning (1) its failure to mobilize pro-European politicians and to generate political will to

actually pursue reforms, (2) its insufficient attention for informal power structures, (3) insufficient

attention for Ukraine‘s complicated relationship with Russia, as well as (4) the absence of clear incentives

and an unfortunate disharmony between long-term rewards and short-term costs. Especially this fourth

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point is crucial, as the empirical research has shown that the most influential actors in the domestic

bargaining process, such as the presidency and the oligarchs, are inclined to favor policies that satisfy their

interests and benefit their own power-positions in the short term. Pragmatic considerations with a focus

on the short term thus are very important factors in the Ukrainian domestic bargaining process. This

stands in sharp contrast with the long-term character of the ENP and its benefits. This helps explain why

Ukraine‘s ‗declarative integration‘ with the EU has not been followed by actual policy reform in the

democratic and economic realms: For most of the domestic actors, the sustained process of painful

reforms that is required to obtain closer EU integration is too high a sacrifice.

Recommendations

In chapter 6 it was recommended that the EU should still pursue a combination of the hierarchical mode

and the network mode, but combine them in a more effective manner: A preferable balance in external

governance towards Ukraine would be an approach largely shaped by using the decentralized tools and

attention for co-ownership of the network mode, and the incentive-structure elements of hierarchical

governance. The reasons for this are that this combination could enhance the legitimacy of the ENP

within Ukraine, as will be explained below.

By making use of the decentralized, specialized mode of governance as provided by the network mode,

the EU and Ukraine could cooperate in a more process oriented manner, which can be conducive for the

implementation and expansion of the ENP Action Plan priorities. This is because a focus on the process

would mean actual cooperation between administrative units aimed at legislative approximation or

knowledge transfers. This focus on ‗actions‘ can prevent Ukraine from continuously declaring its support

for EU membership while not taking the necessary actions to actually integrate more closely with the EU.

An additional advantage of the network mode is the attention for co-ownership of policy that is promoted

by the more equal relations in a network mode. More attention for co-ownership of the policy could

increase the legitimacy of the priorities and points of action created in the ENP in Ukraine, as it would

render the ENP not merely a product ‗from Europe‘, but a product that is both European and Ukrainian.

The hierarchical mode of governance is required to tackle the problems with regard to the vague incentive

structure of the ENP. By untying the ENP from a prospect of membership, the EU has made the journey

of EU integration the end-goal. This renders the impact of the ENP to mobilize Ukrainian politicians

limited: As European integration remains an abstract goal, it is difficult for the pro-European politicians to

explain the exact benefits of the ENP, because the finalité of EU integration is vague, merely being ‗more

than cooperation but less than integration‘ (Wolczuk, 2008, p. 107). For the sake of which end-goal should

Ukraine pursue all these painful reforms? This causes a problem for the EU, which, with the current

‗carrot‘ (market integration) is not able to tackle the current ambivalent foreign policy of Ukraine, which

leads to an indecisive foreign policy that is neither shutting the door for European integration, nor striving

for it in a determined manner.

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The ENP does not offer a clear vision on how to continue the EU‘s relation with Ukraine (Linkevičius,

2008, p. 72). Based on this research, we can conclude that clearer procedures, rules and goals could help

overcome the tension between the short-term pragmatic focus in Ukraine and the long-term ambitions of

the ENP. A clearer incentive structure that would pay attention to both short-term and long-term benefits

could offer Ukraine a greater motivation to actually implement the painful reforms needed for EU

integration, as this research has shown that the root causes of the current discrepancy between Ukraine‘s

declarative integration rhetoric and its feeble reform record lie in the cost-benefit calculation the domestic

actors make. A greater balance in the incentives could tilt the balance in the EU‘s favor.

Another important recommendation moves beyond the ENP, as I would recommend, based on the

findings of this research, the EU to contemplate the prospects for Ukraine: does it want Ukraine to

eventually become an EU member or not? A clearer answer to this question is another factor that could

increase political willingness to undertake reforms. If the concrete gain of accession were incorporated the

EU‘s policy towards Ukraine, it could act as a motor for change. Governments in the accession process

have proved in the past to be able to use the ultimate goal of accession to maintain domestic support for

the often painful policy reforms necessary (Linkevičius, 2008, p. 63; Tudorowski, 2009, p. 6). Thereby the

EU could pursue its goals for its neighborhood in Ukraine: ‗the objective of avoiding the emergence of

new dividing lines between the enlarged EU and our neighbours and instead strengthening the prosperity,

stability and security of all‘ (European Commission, ―What is the Neighbourhood Policy?‖, 2010).

Should the EU not want to offer Ukraine this prospect of membership, it still needs to pursue a more

coherent policy of rewards and sanctions, as currently both rewards and sanctions are too vague. A clearer

incentive structure in a situation where no membership is offered would mean more consistency in

sanctioning Ukraine when it does not abide by the priorities of the Action Plan. This might seem

contradictory to the above plea for more co-ownership of the ENP. The consistent use of rewards and

sanctions is, however, not aimed at making the ENP a tight and hierarchical policy, forcing Ukraine to

take over European standards. Rather, a combination of the proper elements of the network mode of

governance with some vital elements of the hierarchical mode of governance is aimed at making those

priorities agreed upon more explicit, providing more clarity for both Ukraine in terms of what it needs to

do, and for the EU in terms of how it needs to approach Ukraine in order to reach its goals of promoting

stability, prosperity and security.

7.3. Theoretical findings In this third part of the conclusion, I will return to the research question how the theory of liberal

intergovernmentalism can explain how domestic actors shape Ukraine‘s foreign policy preferences and its

positioning. After having assessed whether the ENP towards Ukraine is adjusted to the Ukrainian

preference formation process, I will assess what conclusions we can draw from the empirical work

conducted in this research for the broader theoretical framework of liberal intergovernmentalism. The

research question of this thesis was:

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How can liberal intergovernmentalism explain the way domestic societal actors configure Ukrainian foreign policy preferences

and its position between the EU and Russia, and are these insights reflected in the European Neighborhood Policy towards

Ukraine?

The answer to this question is that liberal intergovernmentalism has provided me in this research with a

theoretical toolbox to open the ‗black box‘ of Ukraine. By looking at the domestic actors that operate in

the Ukrainian political system, I have tried to explain why the Ukrainian foreign policy position is as

peculiar as it is. I have found that the continuous balancing act of Ukraine on the international stage is a

reflection of the balancing act that the main domestic actors in Ukraine make on a national economic and

political stage. Moreover, I have established that the European Neighborhood Policy currently is not

properly adjusted to the specific domestic bargaining process in Ukraine.

Broader theoretical implications of this research

What remains to be contested, based on this research, is the proposition of liberal intergovernmentalism

that states are able to aggregate domestic preferences and translate these preferences into policy

preferences. The fact that this proposition has not found strong support in my study of Ukraine has to do

with the less than democratic nature of Ukraine‘s regime, which provides a political framework wherein

many actors who may otherwise have an impact on foreign policy in democracies are inconsequential for

foreign policy in Ukraine, while the role of informal actors, such as the clans, tends to be bigger. It is

therefore problematic to posit that Moravcsik‘s predictions on the behavior of the executive will work out

in the same way in a country wherein a few actors dominate the political scene, overshadowing those

actors who should possess some instruments to constrain the executive, but fail to do so in reality.

Exemplary is the Ukrainian parliament, which is still to a large extent permeated by private or clan

interests. The aggregation of domestic interests into state preferences is blurred by the informal nature of

Ukrainian politics, wherein a few actors possess powerful instruments to constrain the executive, which is

itself also rooted in clan structures. The possibility that the lion‘s share of the political process takes place

below the surface is not taken into account in liberal intergovernmentalism.

This makes the theory of liberal intergovernmentalism difficult to apply to a country that is not a liberal

democracy. This is not to say that this is impossible: This research has used the steps provided by liberal

intergovernmentalism and thereby has been able to map a large part of the domestic bargaining process in

Ukraine. As became clear in the above, this resulted in useful insights into the Ukrainian balancing act

between the Eastern and the Western vector. These insights can in turn be of great value for attuning the

ENP towards the peculiar situation of Ukraine, which could increase the effectiveness of the ENP for the

EU and for Ukraine.

Nevertheless, this research has equally shown that the Ukrainian political process is permeated by informal

politics. Therefore, it would be naïve to argue that the results of this research reveal the entire picture of

Ukraine‘s domestic bargaining process. This research has tried to map the main domestic actors and their

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foreign policy preferences, according to Moravcsik‘s four sources of political power. This has enabled me

to obtain a fairly clear picture of the peculiar domestic structure of Ukraine and provided insight in

Ukraine‘s foreign policy preferences. The exact extent of the powers of various actors, however, remains

contested, as informal politics by definition do not take place in the open, which make them difficult to

scrutinize. To actually do so would require intensive research in Ukraine, for example by creating an

ethnography of its informal political structure. But even then the researcher remains restricted in his or

her access to the intangible ‗informal relations‘.

As argued by Moravcsik & Schimmelfennig in 2009 (p. 76), a policy-making process is best explained by

liberal intergovernmentalism in areas where preferences are well-defined and certain, in societies where

interests are institutionally organized and represented. This is clearly not the case in Ukraine. Nevertheless,

liberal intergovernmentalism has been of value for this research because of its notion that the foreign

policy goals of a country vary in response to the preferences of the main domestic actors, which has been

key in explaining Ukraine‘s peculiar vacillation between East and West. While many studies on Ukraine‘s

balancing act have been focused on identity politics, the theory of liberal intergovernmentalism has forced

me to focus on the domestic actors and structures, which has given new insights into the pragmatic nature

of the domestic agendas that results in a multi-vectored course of Ukraine‘s foreign policy. These findings

could help improve the European approach towards Ukraine. It has been posited early in this research

that liberal intergovernmentalism remains a powerful theory because of rather than despite its attempt to

be a ‗grand theory‘, explaining European integration in its full breadth. This has been the case in this

research: While the results of this research are, due to the structure of Ukrainian politics, by no means an

all-encompassing truth on Ukraine‘s domestic bargaining process, applying liberal intergovernmentalism

has enabled me to acquire some important insights into the broader process and obstacles of Ukraine‘s

road to the European Union.

.

118

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