Ukraine leadership playing off the EU and Russia while continuing kleptocracy

There are several conclusions we can draw from the current status of the EU-Ukraine negotiations:

Russia’s oligarch’s took the vast majority of Russia’s assets during Yeltsin’s rule in the 1990s. The Ukrainian oligarchs are a group of business oligarchs that quickly appeared on the economic and political scene of Ukraine after its independence in 1991, just as happened in neighboring post-Soviet state Russia. As of 2008, Ukraine’s wealthiest 50 oligarchs account for 85% of the country’s GDP.

The rise of the oligarchs has been connected to the processes of privatization of state-owned assets. These processes usually involved the distribution of property titles of such enterprises, land, and real estate, on equal base to the whole population of the country, through instruments such as privatization vouchers, certificates, and coupons. Given the different preferences of people in relation to risk-aversity, property titles were easily re-sold. Businessmen who could provide an initial investment capital to collect such property titles could thus easily arrive to the property of whole former public holdings.

The oligarchs’ influence on the Ukrainian Government is uncertain, but some analysts and Ukrainian politicians believe that some Ukrainian businesses tycoons, with “lucrative relations” with Russia, are deliberately hindering Ukraine’s European Union integration

-Ukrainian leadership may not yet be ready either to democratise the country or integrate Ukraine into European economic and security institutions. However, the Ukrainian population – even in the Russian-speaking east of the country – is increasingly supportive of Ukraine joining the EU.

-Mr Yanukovych, who is supported by less than half the population, wants to ensure he stays in power. Many Ukrainian experts believe that he tried to play off Russia and the EU in order to maximise his chances of re-election in 2015. To achieve this he needs either a successful agreement with the EU, which would broaden his political base, or Russian President Vladimir Putin’s help in consolidating his authoritarian rule.

-While Ukraine has for now picked the short-term benefits of improving trade ties with Russia over the long-term benefits of association with Brussels, it still refuses to join Mr Putin’s Customs Union, which could lead to further integration with Moscow.

Serhiy Rahmanin of the Ukrainian newspaper Mirror Weekly writes: “Yanukovych is less scared of Brussels than [of] Moscow.” Mr Putin wants to build a new USSR, he contends, which would cost Mr Yanukovych real power.

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