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The Eastern Partnership and Russia in the post-COVID world

The COVID-19 pandemic has had a severe negative impact on the economies of countries under lockdown. The OECD predicts a decline in annual GDP growth of up to two percentage points for each month that containment measures are in place.

July 7, 2020 - Karina Shyrokykh - Hot TopicsIssue 4 2020Magazine

Photo courtesy of Karina Shyrokykh

In the Eastern Partnership (EaP) countries and Russia, the negative impact of the coronavirus pandemic is further exacerbated by the collapse in oil prices, which directly hits Russia, Azerbaijan and Belarus. In particular, the oil-price drop will likely push Russia into recession, with the International Monetary Fund (IMF) estimating a 5.5 per cent decline in real GDP in this year.

In addition, playing an important role in the economies in the region – particularly in Armenia, Georgia, Moldova and Ukraine – remittances inflow from migrant workers have dramatically decreased, further undercutting the economic situation in the region. Ukraine, being the largest recipient of remittances in the region, receiving nearly 16 billion US dollars in 2019, may suffer the most. According to Łukasz Kozłowski, chief economist at the Federation of Polish Entrepreneurs, Ukraine may face a loss of four billion dollars in remittances this year alone due to the crisis. And, moreover, the negative effects are further amplified by the ongoing war that Russia waged in the east of the country.

In the light of the economic decline awaiting the region, what do relations between the European Union, Eastern Partnership countries and Russia look like? And how could relations develop in the aftermath of the crisis? One observation that emerges out of the crisis is that the EU’s policy towards its eastern neighbours is very unlikely to decay. Instead, it is more likely to develop new foci on economic and sectoral co-operation, as well as becoming more tailored to meet the specific needs of the individual countries. For example, the EU, as a measure of solidarity, has allocated two assistance packages to support their neighbours in need. The first emergency package, mobilised by the Commission, allocated over 960 million euros to the region in early April. Its objective is to support countries’ response to the public health crisis and the resulting country-specific humanitarian needs, as well as to support capacities to deal with the pandemic and mitigate the immediate economic consequences.

Acknowledging the damaging effect that the ongoing crisis has on the economic and financial stability in the neighbourhood shortly after the first package, the EU further allocated 3 billion euros of macro-financial assistance in the form of loans to help address the economic fallout of the pandemic. The funds are to complement the IMF’s and World Bank’s assistance in helping enhance economic stability.

The preparedness to step in and provide support in times of turbulences clearly indicates that the EaP region is of importance for the EU and is unlikely to be ignored in the aftermath of the crisis. At the same time, the extent of co-operation is likely to differ from country to country in the region. Economic co-operation is likely to receive more attention than political integration. Given no particular signals of membership perspectives, the COVID-19 crisis is likely to put aside the political integration agenda, giving priority to economic and sectoral co-operation. Both the EU and the various countries which have membership aspirations (i.e., Moldova, Georgia and Ukraine) are more likely to focus on more immediate issues.

However, the absence of membership perspectives does not necessarily imply the slowing down of reforms or sliding backwards. Rather sectoral co-operation and loans may include stricter conditionality. Although the current macro-financial assistance foresees the allocation of funds with conditions of respect for democratic mechanisms, the rule of law and human rights, those are too few and rather unspecified regarding what exactly is expected.

As the Eastern Partnership countries are likely to need long term assistance, the EU could seize the opportunity and develop more nuanced conditions to promote reforms in the region. As the case of the so-called “anti-Kolomoiskyy” law that forbids the return of nationalised banks to their former owners in Ukraine demonstrates, it is possible to overcome the lack of political will and adopt legislation that could potentially hurt the business interests of political elites and their cronies.

Missing the opportunity to further develop co-operation with the region, on the other hand, could make EaP countries turn to illiberal regional powers for assistance, such as China or Russia, who would exploit the crisis to strengthen their political and economic ties in the region. For example, Russia was prepared to provide Moldova with financial assistance of 200 million euros. Likewise, China provided Moldova and Ukraine with medical assistance. Turkey also portrays itself as providing vital assistance to its neighbours. Such instances of assistance are then heavily exploited by these illiberal actors, further promoting a false narrative that the EU is doing nothing, while they provide vital help to those in need within the EU and outside of it.

All in all, the COVID-19 pandemic is unlikely to reduce co-operation between the EU and the EaP region. On the contrary, as the economic impact of the crisis becomes more severe, the EU’s role will be crucial in ensuring economic stability across own borders. Given the need of assistance to EaP states and helping them cope with the impact of the crisis, the EU can use this opportunity to further promote the rule of law and democratic standards in the region. Whether the EU will succeed in using this opportunity will reveal itself in the forthcoming fall, as a few countries prepare to hold presidential (in Belarus and Moldova), parliamentary (in Georgia) and local (in Ukraine) elections.

Karina Shyrokykh is a researcher at Stockholm University and Swedish Institute of International Affairs.

This text is part of a special expert survey titled “Geopolitics and coronavirus” co-financed through an agreement with the Eastern Europe Department at the Polish Ministry of Foreign Affairs.

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