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Ukraine's Arseniy Yatseniuk speaks during last night's "no confidence" debate in parliament
Amidst the ongoing refugee crisis, and the more recent fever over Britain’s efforts to renegotiate its relationship with the EU and avoid Brexit, the crisis that once dominated the European agenda and threatened to plunge the continent into another Cold War disappeared from the headlines. But mounting accusations of rampant corruption in Kiev have thrust Ukraine back into the spotlight, culminating with yesterday’s call by President Petro Poroshenko for the resignation of his erstwhile ally, prime minister Arseniy Yatseniuk.
Last night, the Ukrainian parliament failed to comply, coming up 32 votes short of the 226 needed to pass a no-confidence motion that would have left the country in a state of suspended animation, stuck between choosing a new technocratic government or early elections. Despite that failure, the fallout from the split between Mr Poroshenko and Mr Yatseniuk – who head the legislature’s two largest parties, which are both part of the governing coalition – is likely to make an already unstable situation even shakier.
The current crisis was sparked by the resignation earlier this month of Aivaras Abromavicius, the government’s reform-minded economy minister who stepped down after accusing the government of condoning corruption and cronyism akin to the disgraced regime of Viktor Yanukovich, the onetime president topped in the 2014 Maidan revolution. The International Monetary Fund, which is still leading a $40bn Western bailout of Kiev after the Russian-instigated civil war plunged the Ukrainian economy into an abyss, piled on with chief Christine Lagarde warning the programme could not continue without a “substantial new effort” to invigorate reforms. Read more
Russian president Vladimir Putin visits a Rosneft oil refinery on the Black Sea last year
EU ambassadors head into yet another meeting Friday afternoon to hammer out the latest round of sanctions against Russia. Their bosses have promised to get things done by the end of the week, but there’s still a lot of work to do, so it’s not entirely clear whether a deal can be reached. Also, the on-again, off-again Ukrainian ceasefire could slow things down, though allies don’t appear to be giving much credibility to the Kremlin’s protestations that they are working towards a truce.
As we wrote in today’s dead-tree edition of the FT, we got a leaked copy of the draft legislation approved by the European Commission on Wednesday and sent to national capitals for today’s deliberations. The 18-page text is filled with a lot of jargon and technicalities, but because they could directly affect financial markets, the details matter.
For that reason, we are offering Brussels Blog readers more detail here. Remember: the EU ambassadors could still change much of the wording in their negotiations – though if the July sanctions are any indication, the changes are likely to be on the margins. Read more
Italy's Mogherini, the likely next EU foreign policy chief, arrives at a meeting with her counterparts
If EU leaders are going move forward with additional sanctions against Russia for its increasingly aggressive stance in Ukraine, they have a bit of work to do. The current draft of Saturday’s summit conclusions (we’ve posted a copy we got our hands on here) has very little to say on the topic.
Right now, the operative paragraph on sanctions reads like this:
The European Council remains engaged in the monitoring and assessment of the restrictive measures adopted by the European Union and stands ready to consider further steps, in light of the evolution of the situation on the ground.
Not particularly stirring stuff.
One other point to note in the draft: not only will the summit choose a new EU foreign policy chief (in all likelihood Italian foreign minister Federica Mogherini) and a new president of the European Council (either Polish prime minister Donald Tusk or Danish premier Helle Thorning-Schmidt), but they also must choose someone to head eurozone summits. Read more
A Vienna branch of Sberbank, Russia's largest state-owned bank, which would be covered
Although a large chunk of Brussels officialdom has already cleared out for the summer break, the 28 ambassadors to the EU will be busy this week finalising highly-anticipated sanctions against Russia.
On Monday, they will for the first time be adding “cronies” of Russian president Vladimir Putin to the EU’s sanctions blacklist, and then on Tuesday is the main event: deciding whether to move forward with “phase three” sanctions – measures against entire sectors of the Russian economy rather than just targeting individuals or “entities”.
Over the weekend, national governments reviewed legislation prepared by the European Commission that will be debated during Tuesday’s session. As we reported in today’s dead-tree edition of the FT, we’ve been able to secure a copy of the draft sent to national capitals and have posted relevant excerpts below. Read more
Russian president Vladimir Putin, left, with Van Rompuy at a January summit in Brussels
After weeks of equivocation that made it appear the EU might never move to “phase three” sanctions against Russia – which would target entire sectors of the Russian economy rather than just individuals and “entities” – on Friday things began to move very quickly.
First, EU ambassadors (known as Coreper in euro-speak) tasked the European Commission with drawing up the legislation needed to approve the new sanctions, which would go after the Russian financial, energy and defence sectors. Details of what the sanctions are expected to look like are here.
Then, late on Friday, Herman Van Rompuy, the European Council president, sent a letter to all EU prime ministers urging them to quickly endorse the sanctions package, and to give their EU ambassadors the authority to sign off on them Tuesday. Some countries have been calling for an emergency summit of leaders to approve them, but Van Rompuy clearly wants to move faster. The text of the Van Rompuy letter, obtained by the Brussels Blog, is here:
Sweden's Carl Bildt, centre, and Lithuania's Linas Linkevicius, left, urged an arms embargo
Trying to keep track of what the EU has agreed – or, in some cases, has agreed to consider – on sanctions against Russia is nearly impossible for those not following the machinations up close because the terminology and targets keep changing.
Tuesday’s meeting of EU foreign ministers was just the latest case in point. Some measures were “accelerated”, others were expanded, and still others were put off until a Thursday meeting of EU ambassadors. No new sanctions were agreed, but the nuances could prove important down the road.
According to EU diplomats, some of this lack of clarity is intentional obfuscation. The initial outline of how the EU would gradually ratchet up sanctions has proven politically unworkable, so those negotiating have consciously attempted to blur lines and shift focus to make it easier to get unanimous agreement on the next steps. Read more
A pro-Russian militant stands guard at a checkpoint outside Donetsk earlier this week.
UPDATE: We’ve now posted the draft communiqué on Ukraine. You can read it here.
Today’s special EU summit was originally called to hash out nominees for the remaining jobs atop the big Brussels institutions – the European Council president, the EU foreign policy chief and the chair of the eurogroup of eurozone finance ministers. But recent events in Ukraine have pushed Russia policy back onto the agenda.
According to a draft of the summit communiqué obtained by Brussels Blog – which was pulled together at a marathon session of EU ambassadors on Tuesday – EU leaders could go beyond so-called “phase two” sanctions, which involve targeting individuals for travel bans and asset freezes. But it won’t be all the way to “phase three”, which constitutes sanctions on entire sectors of the Russian economy.
The new intermediate phase, which diplomats say is an intentional blurring of phase two and three, would focus on four elements. First, the EU would cut all new project funding for Russia from the European Investment Bank and caucus together to prevent similar investments from other international organisations where EU countries are members – particularly the European Bank of Reconstruction and Development. Other international financial institutions are not mentioned by name, but diplomats said the World Bank was raised during deliberations. The draft language now looks like this:
Ukraine's prime minister Yatseniuk returns to Brussels Friday to sign the EU integration treaty
Just how sensitive is tonight’s summit dinner debate over the next steps for EU sanctions against Russia? According to EU diplomats, the meal will be for leaders only – no aides, no experts – and they won’t be allowed to bring in mobile phones or other electronic devices.
That’s because the next most likely step is what one senior EU diplomat termed “phase two-plus”: new names, potentially those closest to Russian President Vladimir Putin, are expected to be added to the list of 21 Russian and Crimean officials subject to EU visa bans and asset freezes.
As a result, the draft conclusions that were produced from last night’s meeting of EU ambassadors – which apparently includes those names – is not being given the normal circulation to national capitals and will only be given to leaders once they get into the room tonight. The draft produced before last night’s meeting, a leaked copy of which we’ve posted here, is the last one to get distributed more widely. Read more
Campaign posers for Sunday's independance referendum in Simferopol's Lenin square
Monday’s meeting of EU foreign ministers is shaping up as one for the history books. Just as Crimean officials are scheduled to be finishing their count of the region’s independence referendum, ministers will gather in Brussels to finalise a list of Crimean and Russian officials to be targeted with travel bans and asset freezes, the most significant step yet taken by any of the western allies against the Russian incursion.
But first, diplomats must decide who exactly is on that list.
The process started in EU embassies in Moscow, who pulled together a master list that was forwarded to diplomats in Brussels. According to one diplomat involved in the discussions, the list is to be narrowed to a “small but politically significant” group of people who are “infringing Ukraine’s territorial integrity”. The diplomat put the final number “in the tens or scores”. So perhaps 20 to 40 names. Read more
Arseniy Yatseniuk, the Ukrainian prime minister, at last week's emergency EU summit
When EU diplomats meet again tomorrow in Brussels for another round of talks over Russian sanctions ahead of Monday’s foreign ministers’ meeting, one of the more peculiar points of debate will be about last week’s EU summit promise to sign the “political chapters” of their integration treaty with Ukraine.
Apparently, it may be almost impossible to do so legally – even though the current plan is to have them signed at the EU leaders’ regularly-scheduled summit next Thursday. Bit of a pickle, no?
For those not following things that closely, the EU’s “association agreement” with Ukraine is the thing that first set off the current crisis, after then-President Victor Yanukovich decided not to agree the pact – both a free trade deal and a political affiliation agreement – on the eve of a big summit designed around the signing ceremony. The months of protests that followed eventually led to Yanukovich’s downfall.
At last week’s emergency summit on the Ukraine crisis, EU leaders took many by surprise when they decided to sign the non-trade portions of the treaty – essentially the Preamble, Title I and Title II of the text, which can be read here – even though European Commission officials had previously indicated that they’d wait for a “legitimate” government in Kiev to be elected in the new May presidential vote. Read more
Ukraine's prime minister Arseniy Yatsenyuk, left, and France's François Hollande at summit's start
Today’s emergency summit of EU leaders has just gotten underway and the Brussels blog has got its hands on an early draft of the official three-page concluding statement on Ukraine.
As if it weren’t clear enough already, the draft reveals deep fault lines among member states over the appropriate response to Russia’s actions in Crimea, since there is very little substance in the text thus far. Indeed, the moderates – led by Germany and including countries with strong economic ties to Russia, like Italy and the Netherlands– appear to have succeeded in keeping any specific threats against Russia out of the declaration.
Although the statement endorses the conclusions of EU foreign ministers on Monday – which demanded that Russia return its troops in Crimea back to barracks or face “targeted measures” – the leaders’ statement oddly leaves this specific demand out. There is no language reiterating the foreign ministers’ view on this, which included the demand to “withdraw [Russian] armed forces to the areas of their permanent stationing.” Instead, the draft simply states a commitment to Ukraine’s territorial integrity. Read more
The USS George HW Bush aircraft carrier
With the Russian buildup of forces in Crimea continuing unabated, the internet has been filled with reported sightings of US naval vessels heading into the Black Sea, most recently the USS George HW Bush aircraft carrier which, in reality, was merely heading to the Greek port of Piraeus for a long-scheduled port call.
The latest addition to this internet buzz was reports that Turkey had given the US navy permission for a warship to sail through the Bosphorus, the narrow straight that connects the Eastern Mediterranean with the Black Sea. Read more
José Manuel Barroso announces the Ukrainian aid programme on Wednesday
The EU’s announcement on Wednesday of a new €11bn aid package for Ukraine is both more and less than it first appears.
The “more” part of the package comes in the €1.6bn of so-called “macro-financial” assistance, which is the traditional kind of direct budget aid that we’ve come to recognise in eurozone bailouts. Up until the fall of Victor Yanukovich’s Russia-backed regime in Kiev, the EU had only signed up to €610m in such loans, so the extra €1bn is a significant increase.
The “less” part of the package is the estimated €8bn to come from Europe’s two development banks, the European Investment Bank and the European Bank for Reconstruction and Development. That aid is contingent on finding infrastructure projects to fund in Ukraine, which may prove a fraught exercise. In any case, it’s likely to be long-term assistance of only marginal use to the struggling technical government in Kiev right now. Read more
Sweden's Carl Bildt, Poland's Radoslaw Sikorski and EU's Catherine Ashton consult on Ukraine
As is frequently the case with high-level EU documents, the draft communiqué distributed to national capitals ahead of today’s emergency meeting of foreign ministers is more interesting for what has not been agreed going into the session than what is already set in stone.
And according to a draft obtained by the Brussels Blog, quite a bit is left to be decided, including just how aggressive the ministers will be in threatening sanctions – or “targeted measures” in Eurospeak – against Russia. Our main story on the leaked communiqué gives the outline of the dispute, but as is our practice at the Blog, we decided to post a bit more information here. Read more
A slide from a January 2014 investor presentation by the Ukrainian finance ministry
First of all, just how much financial trouble is Ukraine in?
Almost all major economic powers were out on Monday saying that any aid package would have to wait for a full International Monetary Fund programme. But such “stand-by arrangements” can take months to negotiate – and IMF officials have made clear they want a new government firmly in place before those negotiations can begin, so that may mean we’re waiting until after May’s presidential elections.
So will Ukraine make it until then? Analysts are dubious, and the Ukrainian finance ministry’s declaration on Monday that they are seeking bilateral loans from the US and Poland in the next week or two certainly implies that they’re not sure they can make it that long either.
One key metric to watch is Ukraine’s foreign currency reserves, which for those not seeped in international finance is about as close to a national bank account for emerging market economies as you can get. If Ukraine runs out of reserves of dollars, it can’t pay any of its bills to foreign creditors – such as bondholders or gas providers – and essentially goes broke. Read more
EU foreign policy chief Catherine Ashton, left, with Ukrainian opposition leaders in Kiev last week
One of the lingering questions left after Ukraine’s failure to sign its long-negotiated integration treaty with the EU at a November summit in Vilnius – setting off months of protests in Kiev – is whether more needs to be offered to former Soviet republics than the current “Eastern Partnership”, which promises “association” but not future membership with the EU.
A Swedish-led effort to restart that conversation will be discussed at Monday’s meeting of EU foreign ministers, according to a “restricted distribution” document handed out to all 28 capitals ahead of the gathering. According to the “non-paper” – which Brussels Blog has posted here – 12 countries have signed onto the Swedish initiative, most of them former Soviet-bloc EU members, but also the UK and Germany.
Among other things, the paper, titled “20 points on the Eastern Partnership post-Vilnius”, argues quick signatures of treaties with Georgia and Moldova, the only two remaining after Ukraine and Armenia reneged at the last minute. Read more
EU's Füle, right, with Ukrainian president Viktor Yanikovich in Kiev earlier this year
Is Twitter the right place to announce major foreign policy changes?
That’s the question on the lips of several EU foreign ministers today after Stefan Füle, the EU Commissioner in charge of neighbourhood policy, put a landmark integration deal with Ukraine on hold via these two tweets Sunday morning.
On his way into to a meeting of EU foreign ministers on Monday Morning, Frans Timmermans, the Dutch foreign minister, attacked not only the medium, but the message as well.
“I think that making policy on the basis of a Twitter notice by Mr Füle is perhaps not the best way of approaching this is issue,” said Mr Timmermans. “I believe the best signal we can give Ukraine is simply that the door is still open.” Read more
Jailed opposition leader Yulia Tymoshenko showing what she called a bruise on her forearm
Anyone hoping that the ongoing standoff between the EU and Ukraine over the detention of one-time Orange Revolution leader Yulia Tymoshenko will end soon is likely to be disappointed. With national elections just three months away, there seems to be no interest in Kiev in releasing her during campaign season.
Kostyantyn Gryshchenko, Ukraine’s foreign minister, acknowledged to Brussels Blog that the former prime minister had become more of a problem for his government in jail than free, noting her imprisonment has made an “association agreement” with EU almost impossible to finalise. “We [see] this issue as a certain irritant which obviously is not helping to move ahead with a positive agenda with the European Union,” Gryshchenko said.
But Gryshchenko swiftly repeated the line that other senior Ukrainian officials have made about the Tymoshenko case: there was little he could do to overturn last year’s court ruling that sentenced the former prime minister to seven years in prison for abuse of office. Read more
Ukraine's Viktor Yanukovich, left, and Commission president José Manuel Barroso in March 2010
The European Commission announced today that Ukrainian president Viktor Yanukovich was no longer welcome in Brussels on Thursday after opposition leader Yulia Tymoshenko was sentenced to seven years in prison last week.
Both Yanukovich (who made Brussels his first foreign stop when he became president last year) and Tymoshenko (who attended the pre-summit gathering of centre-right presidents and prime ministers ahead of the March EU summit) have been regular visitors to Europe’s capital as Ukraine tries to finalise an “association agreement” with the EU before the end of the year.
Coincidentally, Ukrainian foreign minister Kostyantyn Gryshchenko was in town on the day of the Tymoshenko verdict and held a round-table with a small group of Brussels-based journalists. Given the day’s events, Brussels Blog though it would be a good time to provide more excerpts from last week’s interview. Read more
If the Greek debt crisis is teaching the European Union some harsh lessons about the design of its monetary union, no less serious is the message coming from Ukraine about the effectiveness of EU foreign policy. Viktor Yanukovich, Ukraine’s newly elected president, agreed a deal with President Dmitry Medvedev of Russia last week that gave Moscow a 25-year extension of the right to station its Black Sea fleet in Ukraine’s Crimean peninsula. In return, Ukraine secured a 30 per cent cut in the price of Russian gas deliveries. Read more