Irina Kobrinskaya, Leonid Vardomsky, Dmytro Boyarchuk, Moscow - Kyiv

Eurasian Home: Which Ukrainian and Russian forces will benefit from the agreements signed by Dmitry Medvedev and Viktor Yanukovych in Kharkiv?

Irina KOBRINSKAYA, executive director of Foundation for Prospective Studies and Initiatives, leading fellow of the Institute of World Economy and International Relations, Russian Academy of Sciences, Moscow:

The main question for the next few years is whether the Kharkiv agreements will become a tool of stabilization, development and rapprochement of Ukraine and Russia, or the agreements will become a sore point of the Ukrainian government and will make it more vulnerable to the opposition. If the latter scenario takes place, the revision of the agreements will hang like the sword of Damocles over the Ukrainian and Russian political establishment and businessmen.

For the time being the assessment of the agreements is unamenable to the “price-effectiveness” analysis, as the signers themselves are unlikely to understand their details well. First of all, it is unclear how much the agreements will stimulate the modernization of the both economies. The price and importance of Russia’s Black Sea Fleet in the Crimea invite still more questions in the military and political spheres (especially in the light of improvement of Russia’s relations with the West and NATO).

If the situation with the agreements is favourable, the consequences may be as follows:

• Ukraine can amend its 2010 Budget slightly and meet with the weighty support from the IMF.
• Ukraine’s big business will benefit.
• The Ukrainian population will also win.
• The investment climate will improve in Russia and in Ukraine.
• Sevastopol and partly the Crimea will win.
• The Russian and Ukrainian parties in power will win politically.

But in the event of serious problems with the agreements, the Ukrainian opposition will get the trump card.

Leonid VARDOMSKY, doctor of Economics, professor, head of the Center for the Comparative Studies of the Transformation Processes of the Institute of Economics, Russian Academy of Sciences, Moscow

The pro-Russian forces in Ukraine and the pro-Ukrainian forces in Russia, the companies working in the defense industry, the energy sector and the transport, the advocates of the SES (Single Economic Space) project will be the winners. The Russian community of the Crimea and the city of Sevastopol, the Russians, who like to spend their holidays in the Crimea, etc will win too.

Dmytro BOYARCHUK, executive director of the Center for Social and Economic Studies CASE-Ukraine, Kyiv

The Kharkiv agreement is really a plus for the whole Ukraine. The Cabinet headed by Mykola Azarov was faced with the choice – either to obtain the profitable gas conditions or to come to agreement with the IMF about a new programme of radical reforms. In the latter case the government would have to carry out tough reforms, and it is not known what they would lead to (in Kyrgyzstan the consequences were unfortunate). So the Kharkiv agreements are not bad for Ukraine. The Black Sea Fleet issue has never been fundamental for the Ukrainian society, that’s why this subject is taken calmly.

Eurasian Home: Can the “grey schemes” and mediators appear again in the chain of gas re-export to Eastern Europe after the conditions of the Russian gas supplies to Ukraine changed?

Irina KOBRINSKAYA:

This becomes less and less possible. On the whole, this agreement plays into Europe’s hands as it guarantees that the Russian gas will be supplied without interruption.

Leonid VARDOMSKY:

This is possible. Everything depends on the ratio of the gas prices for the Ukrainian and European consumers.

Dmytro BOYARCHUK:

Many influential businessmen will seek to return the schemes. Whether they will manage to do that is a different issue.

Under Viktor Yushchenko’s presidency the grey schemes were analyzed in the mass media in detail, and now everyone in Ukraine realizes what schemes “RosUkrEnergo” and other companies used to earn money. How to create new schemes in such conditions? I believe that it would be a difficult task.

Eurasian Home: How will the Kharkiv agreements influence Ukraine’s politics? What can the Ukrainian opposition do in the near future? Can the opposition hinder the agreements implementation, and how can they do that?

Irina KOBRINSKAYA:

The political situation has already worsened. The opposition tried to block the ratification of the agreement on the Russian Black Sea Fleet in the Verkhovna Rada of Ukraine. The nationalistic forces will become more active.

But the opposition cannot appeal to the external forces: neither the USA, nor NATO, nor the EU will interfere in the Russian and Ukrainian affairs and infighting at this stage.

Leonid VARDOMSKY:

The agreements consolidate the Ukrainian opposition. Protest marches can take place and the Ukrainian society can become still more polarized. But if the Ukrainian authorities make the best use of their new opportunities (if they approve the 2010 Budget, use the IMF tranche, keep the prices down, strengthen the hryvna, hold the Europe football championship in 2012), then this opposition consolidation resource may be inefficient.

Dmytro BOYARCHUK:

This agreement strengthened the positions of the Party of Regions. Firstly, a discount of 30% granted by Russia to Ukraine for the Russian natural gas made it possible not to cut the social expenditures, secondly, the IMF credits are not needed any more.

Given this situation, the Ukrainian opposition has only to raise the issue of the Russian Black Sea Fleet. But, as I have already said, the presence of Russia’s Fleet in the country is of little importance to the Ukrainians.

Now the opposition is slightly confused, as nobody expected that Yuliya Tymoshenko would lose control over all the leverage so quickly.

Eurasian Home: What steps can be taken for rapprochement of the two countries in the economic and humanitarian spheres, and who can take them? Will the rapprochement result in the “cheep gas for fleet” exchange?

Irina KOBRINSKAYA:

The agreement touches upon such important economic spheres as aircraft building and others, that if it is ratified, the states can step up the cooperation on a lot of issues.

The “cheep gas for fleet” agreement is expected to be bad for, first and foremost, Russia.

Leonid VARDOMSKY:

Cooperation in those spheres has a great potential and will develop in the favourable political atmosphere. It is important to create a favourable trade regime between Russia and Ukraine, but the Customs Union, which is being formed by Belarus, Kazakhstan and Russia, can prevent that.

April 29, 2010