For pro-EU Ukraine, a chill wind blows with Brexit

Ukrainians are watching the turmoil in Europe following the Brexit vote with sinking hearts. 

In early 2014, many Ukrainians staged the pro-European Union Maidan Revolution in the heart of Kiev and overthrew their legally elected pro-Russian president over his decision to postpone an association agreement with the EU. They have since endured civil war, likely permanent rupture with Russia, their neighbor and former top trading partner, and a multitude of painful privations to pursue that goal of drawing closer to Europe. 

Two years ago, the EU seemed a strong, confident, and politically united colossus that was actively working to bring post-Soviet countries on its periphery, like Ukraine, onto the path of eventual membership. Then a tsunami of troubles hit, including financial meltdown in Greece, a Europe-wide crisis over how to absorb millions of refugees from the Middle East and Africa, and the rise of Euroskeptic parties in many countries.

At the same time, a certain "Ukraine fatigue" has taken hold in parts of Europe over Kiev's failure to banish corruption and implement promised reforms, most dramatically illustrated by last April's Dutch popular vote to disavow the EU's association agreement with Ukraine. And now the specter of Brexit – an EU member actually voting to abandon the union that Ukrainians have striven so mightily to become part of.

"This will worsen the prospects for Ukraine, no doubt about that," says Vladimir Panchenko, an expert with the International Center for Policy Studies in Kiev. "The EU now looks to be split, with every country threatening to go its own way. Policies meant to support Ukraine, like EU sanctions against Russia, will become weaker. Countries that don't back sanctions so strongly, like France and Germany, will have greater weight if Britain leaves. Now the game will be more in Russia's favor than Ukraine's."

Up and down

There are no polls yet to quantify Ukrainians' reaction to Brexit. But Anton Grushetsky, an expert with the Kiev International Institute of Sociology, says the attractiveness of the EU as a destination for Ukraine had already been waning in recent months. Before the Maidan, in 2013, some 40 percent of Ukrainians supported the EU orientation, compared with 35 percent who wanted to join the Russian-led Customs Union. Amid spiking anti-Russian moods and civil war in 2015, backing for the EU had grown to about 55 percent. Since then it has fallen by as much as 10 percent, even before Brexit, he says.

That comes alongside a harrowing crisis of popular trust in Ukraine's leaders, mainly over their ongoing failure to root out corruption, end behind-the-scenes influence of super-wealthy oligarchs, and hammer out peace terms with east Ukrainian rebels.

Economic pain is high on the list of reasons for public disillusionment, and experts say the fallout from Brexit is only likely to make things worse. The Ukrainian hryvnia has lost almost two-thirds of its value in the past two years. Inflation is falling, but still running at about 10 percent. About 20 percent of the country's industrial potential is concentrated in the rebel-held east.

"The EU association agreement [which came into effect in January 2016] has not produced major results," says Alexander Parashiy, an economist with Concorde Capital, a Kiev-based brokerage. "We were mostly interested in duty-free access for our agricultural exports to the EU, but it turns out that the imposed quotas for Ukrainian produce are very small. At the same time, our trade with Russia and other [former-Soviet] countries has fallen sharply. Still, we are trying to reorient our economy, and people should understand it's a long job that doesn't bring immediate benefits."

Mr. Parashiy says Ukrainians had hoped that the EU would award significant aid and investment to a pro-Western Ukraine to help bring its economy up to European standards, comparable to the $300 billion it pumped into Ukraine's neighbor Poland after it joined the EU in 2004.

"With what's happening in the EU now, there is no hope for any large-scale assistance," he says.

Another key benefit Ukrainians had been counting on, visa-free travel to the EU, may be fading as well.  President Petro Poroshenko told journalists this week that he hoped the EU's preoccupation with Brexit would lead to only a brief postponement in achieving that goal.

"The majority of Ukrainians have taken Brexit negatively, but they would be even more disappointed if the EU doesn't grant them free entrance to Europe," says Irina Bekeshkina, director of the independent Foundation of Democratic Initiatives in Kiev. "It's very important for a big part of our population."

Vladislav Lukyanov, a former anti-Maidan member of parliament, says Brexit is a symbolic blow that will "separate Ukrainians from their pipe-dreams." Ukrainians have been living on hope that the EU will solve their problems, and now they have to wake up to the world they've made, without the carrot of EU association, and a broken relationship with their former main economic partner, Russia.

But Alexander Danilyuk, head of the independent Center for Defense Reforms in Kiev, says that Ukraine's course toward Europe is unchangeable. 

"For me, civilization is based in Europe, not in Moscow, and that's the direction we need to maintain. Whether the EU exists in its present form or not, it will always be there. And Ukraine wants to be part of it."