Will cheese become harder and candies sweeter?

“The key problem for us is to come to an agreement with Russia. We have lost a quarter of trade turnover. Jobs and salaries of tens of thousands of Ukrainians depend on this. I hope that we will be able to solve this problem,” said Prime Minister Mykola Azarov at the last meeting of the Party of Regions in Donetsk.

Since Ukraine declared its pro-European position, its relations with the Russian Federation have significantly cooled down. This has deteriorated the balance of payment, job market, and social policy of both countries. Both parties lose in a war, the aggressor and the one that defends. Obviously, the Vilnius Summit has to put an end to this confrontation. Today the majority of Ukrainian and Russian mass media focused on the options of “to sign or not to sign,” which has led to “to release or not to release.” And we have tried to look at what might happen after the D-Day. What will our northeastern border will be like if we sign the Agreement with the EU? What will it be like if we do not sign it? And what if signing will be postponed till 2014? Leading experts shared their forecasts with The Day.

No.1 “WE WILL SIGN THE AGREEMENT: RUSSIA’S ACTIONS ARE BECOMING EVEN MORE AGGRESSIVE”

President of the Center for Market Reforms Volodymyr LANOVY thinks that scenarios of “friendship with Ukraine” are being written out in the Kremlin at the moment. He thinks that if we sign the Agreement in Vilnius, the situation with Russia might become unpredictable and its actions more aggressive. “It will happen if its leaders are short-sighted. But it is also possible that a relaxation might occur if they are far-sighted,” says the expert. However, despite any of these scenarios, we should expect the increase of Russian business penetration into Ukrainian economy. “Since the Russian entrepreneurial capital is not free, but is guided by the government, it will be managed according to the directions from above,” Lanovy speculates. That is why the possibility of the consolidation of Russian business influence from within Ukraine is quite real, according to him. “There is such a tendency already, but at the moment it is hard to identify the stage of its development.”

No. 2 “WE WILL SIGN THE AGREEMENT: THERE WILL BE A ‘REVERSE’ PROVOKED BY THE FIFTH COLUMN”

“The Kremlin’s tactics started changing right after Russia finally understood that the method of dictating their will to certain Ukrainian politicians does not work anymore, and the Kremlin’s last hope, the president from Donetsk, has already submitted two crucial laws to the parliament: on foreign policy and on European integration,” says the first president of Ukraine Leonid KRAVCHUK. That is why a new strategy of relations started forming two years ago: economic sanctions and consolidation of the ‘fifth column’ within the country. “The fifth column has always been present in Ukrainian politics,” Kravchuk recollects. But at the dawn of independence, despite their preferences for Russia, representatives of that fifth column were smart and courageous enough to make historically important decisions, such as adopting the Declaration of Sovereignty and the Independence Act. Now there is no such courage, Kravchuk is convinced, because ‘financial columns’ started acting, which determine people’s behavior.

The first president of Ukraine says that the main danger today is that Russians still might find support for the fifth column. “That is why the Ukrainian government must present a counteraction, which will neutralize the impact of this column,” advises Kravchuk. And we should not be afraid of Russia’s economic horror stories. “Do you think that Russia will really close down oil and gas wells in Yakutia, which are staffed with mostly Ukrainians? Or perhaps, it will give up our experts in aircraft sectors? No, it will not,” persuades Kravchuk. In his opinion, Russian pressure will become stronger until we sign the Agreement with the EU. “And only then will they start looking for other options of developing economic relations. While we are still at the crossroads, Russia hopes it might stop our movement towards Europe with its actions,” Kravchuk summed up.

On the other hand, Vadym KARASIOV, director of the Institute of Global Strategies and political analyst, is convinced that we will not have a strong fifth column. There are separate representatives of the third and fourth echelon of the Ukrainian political elite. But the farther we are from the Soviet Union’s collapse, the less leverage our neighbor has to put pressure on us through its agents of influence. “Once, there were Natalia Vitrenko and Viktor Medvedchuk. And which young politicians have a frank and sincere pro-Russian stand? It is not popular and is viewed as a task for marginal people or those who want profit from connections with Russia. That is why the situation is problematic for Russia: they do not have strong personal players for the 2015 presidential elections and parliamentary elections, as they once had,” Karasiov says.

But the risk of turning into the Kremlin’s and Russian business’ agents of influence is quite real, the expert thinks, since there did exist a slogan “Buy Ukraine, buy Ukrainian actives, plants, banks, and tourist complexes.” They were bought with the revenues from oil and gas rent. However, Karasiov thinks that there will be no mass expansion of business capital from Russia. Why? “In order for this to happen, they must buy up the whole Ukraine, absorb it, and destroy Ukrainian oligarchy as an independent political and economic force. Our businessmen understand this; they are very cautious about such business-expansion of our neighbors and do not let Russians have too much fun in Ukraine. Everyone understands that if Russian business sharks come over here, our Ukrainian business piranhas will become extinct. That is why signing the Free Trade Agreement with the EU is the only way for Ukrainian oligarchs to survive and transform. So, we are going to move towards Europe, open its market, attract European investors,” Karasiov says. And from this position we might have a trilateral conversation as equals, the expert sums up.

No. 3 “WE WILL SIGN THE AGREEMENT: RUSSIAN CAPITAL WILL ESCAPE TO UKRAINE”

Economist and author of the book How to Raise Ukrainian Economy Andrii NOVAK believes that if the Association Agreement is signed with the EU, relations with Russia will remind those between Russia and the Baltic countries: the pressure will stop, but for some time our neighbors will demonstrate how bad it can be for us. After all, it will come to an end. And the escape for middle-sized Russian capital to Ukraine will start, Novak says. Since the interests of this business layer lately do not coincide with the actions of the Russian government. “The fact that Russian business is prone to display a higher degree of attention to Ukraine is not a result of the Kremlin’s policy, but a natural economic interest of business, which will use Ukrainian economic territory for expansion of its presence in the EU market after the Association Agreement is signed. So, the neighbors’ business will strengthen its presence in Ukraine in order to ‘Europeanize’ its capital. Ukraine will become a ‘harbor’ for the Russian capital which wants European progress and civilized relations.” Novak thinks that the arrival of Russian businessman (now Ukrainian MP) Vadym Novynsky in Ukraine is a vivid example of that.

According to Novak, even before the signing the Association Agreement with the EU, less public businessmen from Russia and Belarus have already started looking for a warm place in Ukraine for themselves and their capital. Owners of medium-scale businesses are fed up with politically motivated economic decisions and do not want to depend on the will of one person. And this plays in our hands, Novak says, because they will invest in Ukraine’s industry and create new jobs. Novak thinks that the capitals that are not tied to Russian resource base will move to Ukraine. Those are, in the first place, processing, food, light industries, etc.

No. 4 “WE WILL NOT SIGN THE AGREEMENT: DEPENDENCE ON RUSSIA WILL INCREASE”

If signing the Agreement with the EU fails, energy dependence on Russia will increase in the long run, says head of the All-Ukrainian Association of Economists Oleksandr KENDIUKHOV.

And then we will have to play according to Russia’s rules.

But it can be avoided if the government focuses on updating the investment and innovation policy, reforming tax legislation, and immediate upgrading of production facilities.