On the conflicting business interests of the “old” and “new” EU

Ukraine and Poland are two sisters. One of them successfully married 20 years ago and is now drawing the other into her husband’s family. But, first of all, she wants to teach her sister the new family’s rules so that she does not make mistakes. This metaphor ran through the sessions of the Ukrainian-Polish Club that functioned as part of the international conference “Association Agreement and Free Trade Area between Ukraine and the EU: challenges and opportunities for the economy and investment” held on October 15-16 at the European Parliament in Brussels.

It was a long and, as far as possible, frank debate in front of TV cameras and dictaphones.

The main thing that The Day has brought back to Kyiv from Brussels is the answer to the question why Poland so much focuses on Ukraine’s integration with Europe. This luckier sister of ours is drawing the unluckier, at first glance, one into a new family not at all because she wants the latter to eat better and dress more fashionably. The sister does not seem to be living all too sweetly in a new family, so she needs an ally that will help her trim the rules a little.

Lobbying Ukraine’s integration with the European family, Poland pursues, above all, her own, not our, interests. It is no secret that when the Eastern bloc states, including Poland, entered the free trade area, they were forced to compete with economically much more developed countries. The affluent countries, such as Germany and France, have a considerable financial advantage, and their businesses outdo their rivals owing to the brand and scale effect. They have essentially monopolized the advantages of a free market. By contrast, the economies of the new EU member states have slim chances in this competition. The abstract of the Ukrainian-Polish Club proceedings says that “introducing a chance-equalization mechanism” is one of the solutions of this problem. This particularly means that, firstly, the “new” EU member states must demand that EU-adopted laws take into account the interest of not only the economically rich countries but, first of all, the former Eastern bloc’s poorer countries. Secondly, Ukrainian-Polish Club experts believe that one of today’s key problems is interpretation of legal provisions about dominating position abuse. But it is practically impossible for Poland to make the European Union bring about these changes in its policy unless she has allies.

Ukraine is a large country. If she joins the EU, there will be about 50 Ukrainian members of the European Parliament. Poland has almost the same number now (54), and 84 more represent the so-called Eastern bloc countries: Slovenia (7), the Czech Republic (24), Hungary (24), Slovakia (14), Latvia (9), and Estonia (6). So if Ukraine joins, the Eastern European countries will have together more votes in the EP than, say, Germany (96) or France (74). It is in fact this aspect that Boguslaw Liberadzki, member of the European Parliament’s group of the Progressive Alliance of Socialists and Democrats, emphasized during his visit to Kyiv in the summer of this year. “What really matters is influence,” he said, arguing that the old EU member states are not interested in Ukraine joining the European Union. “For it will no longer be a French-German European Union,” Liberadzki stressed.

But, to assume the status of an ally of any EU member – be it Poland or Germany – we must still work very much. And, what is more, before our deputies reach the European Parliament, we have to represent someone’s interests. The experience of Poland will, of course, come in handy in this case.

Here are what we consider the most interesting and instructive points in the speeches pronounced at the Ukrainian-Polish Club in Brussels on October 15-16.

ON WHAT CAUSED SOME INDUSTRIES TO “DIE”

The integration of Poland into Europe had the most harmful effect on the economic sectors whose commodities could not withstand competition. According to Jaroslaw KALINOWSKI, MEP and former vice-prime minister of Poland, a crisis gripped, first of all, the automobile and farming machinery production. These products were just unable to provide competition for stronger producers in Germany and France. These industries were in fact on the verge of extinction. Ukraine, too, should take this experience into account, test her producers for competitiveness, and protect them by training.

ON DISTRIBUTION OF NATIONAL WEALTH BEFORE AND AFTER JOINING THE EU

Pawel ZALEWSKI, European Parliament member: “Poland’s entry into the European Union set into motion the irreversible process of middle class formation. This formed a thick stratum of middle-income people. As for distribution of the national income, it has become very well-balanced. We avoided huge disproportions – such as you are having now [e.g., the annual income of Ukraine’s richest businessman is an estimated 15 percent of GDP. – Author]. You can reach a more balanced distribution in Ukraine.”

IN LIEU OF THE AFTERWORD, SPECIAL TO THE DAY

Addressing the Ukrainian-Polish Club on the first day, Vice-Prime Minister of Ukraine, Kostiantyn HRYSHCHENKO, figuratively said that Ukraine needed practical assistance, not just advice. “As far as settlement of financial problems is concerned, we are convinced that the best answer is cooperation with the IMF. Ukraine needs just a fraction of the amounts the IMF is giving to some EU members today. And I believe the EU can do much more to solve this problem. We are convinced it is also in the interests of the EU itself,” he said. Hryshchenko urged European partners to show solidarity with Ukraine in the solution of pressing economic problems and do their best to have the Association Agreement signed.

Taking advantage of the presence of a European Parliament’s Budgetary Committee member at the panel discussion, The Day asked him about the prospects of EU financial support for Ukraine to implement the Association Agreement and about whether it is necessary, with due account of Polish experience, that the Ukrainian budget have an item on Europe integration expenses and, if so, in what proportion to GDP.

“Do not forget that the Ukraine-EU Association Agreement has not yet been signed. No signing, no agreement,” MEP Boguslaw Liberadzki told The Day. “The next EU budget is the financial plan for 2014-20. This is a new document that will make it possible, if necessary, to make changes to some articles that require additional allocation of funds. Besides, once the Association Agreement is signed, the government of Ukraine and the European Commission should meet to outline priorities. What shall we begin with? Transport? The infrastructure? The social find? The Countryside? What are the top priorities in the EU-Ukraine cooperation?

Moreover, in Liberadzki’s words, Ukraine should establish a specialized governmental institution in charge of identifying these priorities and monitoring the fulfillment of tasks. “This is still to be done. I don’t know the people. To receive financial aid, you should build this infrastructure,” the MEP says. But still, he concludes, signing the Association Agreement is the No.1 item on today’s agenda. “I am personally 79.5 percent sure it will be OK,” he commented.