Issue 2 (2), 2015

ARMENIA AZERBAIJAN VYSHEGRAD 4 VYSHEGRAD

UKRAINE ENERGY SECURITY ENERGY EASTERN PARTNERSHIP PIPELINESREVISION POLICY NEIGHBOURHOOD DCFTA POLITICS TURKEY CHOICE TRADE ECONOMYFINANCIAL CRISIS

BLACKASSOCIATION SEA FRAMEWORK AGREEMENT UNION EUROPEAN

• Politics vs Economy • Energy Security • Association Agreements UA: Ukraine Analytica · 2 (2), 2015 1 Issue 2 (2), 2015 BOARD OF ADVISERS

Politics vs Economics Dr. Dimitar Bechev (Bulgaria, Research fellow, London School of Economics and Social Science)

Dr. Iulian Chifu (Romania, Director of the

Editors Conflict Analysis and Early Warning Center) Dr. Hanna Shelest Dr. Igor Koval (Ukraine, Rector of Odessa Dr. Mykola Kapitonenko National University by I.I. Mechnikov)

Dr. Sergey Minasyan (Armenia, Deputy Publisher: Director at the Caucasus Institute) Published by NGO “Promotion of Intercultural Cooperation” (Ukraine), Stephan Meuser (Germany, Director of Centre of International Studies (Ukraine), the Representation of the Friedrich Ebert Foundation in Ukraine and ) Representation of the Friedrich Ebert with the financial support of the Foundation in Ukraine. James Nixey (the United Kingdom, Head of the Russia and Eurasia Programme at Chatham House, the Royal Institute of International Affairs) academic/analytical journal in English UA: Ukraine Analytica is the first on International Relations, Politics Dr. Róbert Ondrejcsák (Slovakia, Director of and Economics. The journal is aimed for Center for European and North Atlantic Affairs) experts, diplomats, academics, students interested in the international relations and H.E., Dr. Oleg Shamshur (Ukraine, Ambassador Ukraine in particular. Extraordinary and Plenipotentiary of Ukraine to France)

Contacts: Dr. Stephan De Spiegeleire (The Netherlands, website: http://ukraine-analytica.org/ Director Defence Transformation at The Hague e-mail: [email protected] Center for Strategic Studies) Facebook: https://www.facebook.com/ ukraineanalytica Ivanna Klympush-Tsintsadze (Ukraine, Twitter: https://twitter.com/UA_Analytica Member of the Parliament of Ukraine)

Dr. Dimitris Triantaphyllou (Greece, Director of the Center for International and European Studies, Kadir Has University (Turkey))

Dr. Asle Toje (Norway, Research Director at the Norwegian Nobel Institute)

UA: Ukraine Analytica · 2 (2), 2015 1 TABLE OF CONTENTS

TO BUILD A FOREIGN POLICY CAPABLE OF DEVELOPING ...... 3 Interview with Hanna Hopko, MP, Head of the Committee on Foreign Affairs of the Parliament of Ukraine for UA: Ukraine Analytica

AT THE RIGHT TIME IN THE RIGHT SHAPE ...... 8 Amb. Andri Veselovsky

EASTERN PARTNERSHIP UNDER RECONSTRUCTION: THE UKRAINIAN TEST...... 18 Hennadiy Maksak

FACTORS INFLUENCING THE PERCEPTION OF AZERBAIJAN IN RELATIONS WITH THE EUROPEAN UNION...... 25 Rovshan Ibrahimov

EASTERN EUROPEAN REGIONAL COOPERATION AFTER CRIMEA: THE ART OF THE POSSIBLE ...... 32 Iryna Maksymenko

POLITICAL AND ECONOMIC CONSEQUENCES OF THE EU’S AUTONOMOUS TRADE PREFERENCES FOR UKRAINE ...... 41 Anton Kuchukhidze

LIVING IN SUSTAINED UNCERTAINTY. THE BLACK SEA REGION AFTER THE 2008 GLOBAL FINANCIAL CRISIS...... 48 Panayotis Gavras and Panagiota Manoli

ENERGY PROJECTS AROUND THE BLACK SEA: GEOPOLITICS VS. ECONOMY...... 56 Amb. Sergiy Korsunsky

POLITICS VS. ECONOMY IN EUROPEAN ENERGY AFFAIRS AND THE ROLE OF UKRAINE...... 63 Andrii Chubyk

2 UA: Ukraine Analytica · 2 (2), 2015 FACTORS INFLUENCING THE PERCEPTION OF AZERBAIJAN IN RELATIONS WITH THE EUROPEAN UNION

Dr. Rovshan Ibrahimov Hankuk University of Foreign Studies (South Korea)

Since its independence, Azerbaijan and the EU maintained relations, which phased development. The EU developed new tools that transformed the form of these relations from purely economic to legal and had to be found within the constraints of integration. However, for the first time, this format of relations development does not suit Azerbaijan; so it is taking an initiative to create the future scenario of cooperation with this organization. This article provides analysis of the perception of Azerbaijan's relations with the EU and the possible reasons for their development.

Beginning of relations between the region and the New Independent States sides (NIS).29 independence of Azerbaijan together with Both Azerbaijan and the European Union the other The former EC Soviet officially Union recognized states on the31 (EU) became subject to international law December 1991. In 1993, the EU began to at about the same time. However, their assist those countries, which faced political relationship is not an interaction in the and economic troubles. This was of great classical sense, since the EU is not a nation importance to the countries, which were state. In addition, the EU is also not an suffering a deepening economic distress, international organization in the classical starting from the last days of the Soviet conception. That is why the level and Union. The EU’s relations with Azerbaijan degree of the relationship between the EU progressed through a similar process to and Azerbaijan is highly dependent on the that with other NIS states. characteristics of the EU. Actually, relations with the European After the collapse of the , Communities and Azerbaijan SSR started to there was a brief period of uncertainty and develop in the time of the Soviet Union (via the European Communities and then EU central government in Moscow) within the continued to pursue a Russia-based policy framework of TACIS30 and other initiatives. towards relations with the countries of the One of the important initiatives within

29 Former Soviet Union Republics. 30 Technical Assistance for the Commonwealth of Independent States.

UA: Ukraine Analytica · 2 (2), 2015 25 TACIS Program was TRACECA31 — an became the next step in development of inter-state regional improvement program relations between the parties. In 1992, the initiated by the EU in 1992. The major European Council decided to sign a new objective of this program was the formation agreement with NIS as the result of the of an international network, which would formation of a new political and economic create infrastructure (both national and situation. PCA, which would confer a new international), develop common standards impetus for the development of relations, and facilitate the application process in was signed between the European Union the covered areas, which could be done and Azerbaijan on 22 April 1996.33 The at minimal cost. The program considered networks in transport, energy, and provisions promoting the creation of a dialoguefirst article framework of the for agreement the development included of political relations with Azerbaijan, the Aftertelecommunications two years since fields. Azerbaijan regained development of democracy and economy; its independence, on September 20, 1993, and the provision of assistance by the EU it signed an agreement with the European to Azerbaijan in order to complete the Economic Community on regulating trade process of transition to a market economy, the development of trade and investment, the development of relations was given on harmonious economic relations between Septemberin the field of1997, textiles. by Azerbaijani A further impetus President to the agreement parties, and provision of Heydar Aliyev and Georgian President economic sustainability and cooperation in Eduard Shevardnadze, who both understood the opportunities of the TRACECA Program and desired to develop their relations with legal, economic, social, financial, scientific, Anothertechnological, tool of and foreign cultural policy fields. developed by to the EU to hold a conference within the the EU towards the neighbours, including frameworkthe EU. In 1998, of the these TRACECA two leaders for signing proposed the NIS is the New Neighbourhood Policy, was Multilateral Transportation Treaty introduced in order to establish stability, EU supported this offer, and a conference security, and welfare of the surrounding « Revitalization of the Silk Road». The areas of the EU. The enlargement process cannot continue forever, therefore the EU, on the « Transport Corridor»’ was which aims to complete its political alliance Europe-Caucasus-Asiaheld in Baku on September, for the 8, Development1998. At the in the future, needed a new instrument to ofend International of the conference, Multilateral « Treaty support political and economic reforms in signed.32 the neighbouring countries.34 » was Successful implementation of the NNP Forging a new EU foreign policy would provide a similar status for towards the former Soviet countries participants to the one for the members of the European Economic Area aiming Partnership and Cooperation Agreement to fully realize economic integration (PCA), a new tool developed by the EU, with neighbouring countries without the

31 Transit Corridor Central Europe-Caucasus-Central Asia. 32 http://www.mfa.gov.az/az/foreign_policy/inter_affairs/econom/regional/11.shtml, 33 AnnotatedAzərbaycan Summary Respublikas of Agreementsının TRASEKA Linking layihəsində with Non-member iştirakı, Countries, 2000. 34 Foreign Affairs Review, Volume 11, No 2, Holland, Kluwer Law International, Summer, 2006, pp. 139-140. B. Ferrero-Waldner, “The European Neighbourhood Policy: The EU’s Newest Foreign Policy Instrument”, European

26 UA: Ukraine Analytica · 2 (2), 2015 prospect of political integration.35 The cooperation between the parties in the basis of this initiative lies in a differentiated Azerbaijan step-by-step approach. Accordingly, a considered the proposal by 38the EU as a proposed individual action plan should be continuationfield of energy ofand the transport. bilateral relations developed with each of the neighbouring between the parties. the common criteria determined in the processstates and of integration would aim into at the EU fulfilling common of the framework of the NNP, the EU made market.36 itWith clearly the developmentunderstood that of relations the countries under of the former Soviet Union which are The talks between the EU and Azerbaijan in located in Europe and are theoretically the framework of the NNP were completed eligible for membership in the organization should have quite different mechanisms of Brussels on November, 14, 2006. This Plan cooperation than those in Africa and Asia wasby signing signed the on behalffirst National of the EU Action by External Plan in that were also participating in the New Relations and European Neighbourhood Neighbourhood Policy. Since the EU was not Policy Commissioner Benita Ferrero- ready to begin the process of integration with these countries, it was necessary to of Azerbaijan Elmar Mammadyarov.37 The create a framework of relations at a level NationalWaldner andProgram the Minister was signed of Foreign for a Affairsperiod superior to that of all earlier proposed programs, while not offering to these states the rapprochement between the EU and membership in the organization. partnerof five years state andand requireddetermine consolidation the adaptation of process of norms and standards. Additionally, offering this kind of initiative was, in some ways, a reaction to To summarize, the main general objectives international developments, and events in of the Action Plan were to consolidate some countries of the post-Soviet world. the rule of law; strengthen respect for In particular, there were so-called “Colour human rights, fundamental freedoms, Revolutions” in Ukraine and Georgia, not and democratic institutions; initiate a transparent privatization process; resulted in each country publicly stating its improve business and investment climate; desirewithout to theintegrate support into of the the Euro-Atlantic West, which improve legal regulations on economic implementationstrengthen the fightand against management corruption; structures. Moreover, after a «five days consolidation; develop regional co- inwar» any between way to support Russia andits ally Georgia, Georgia, when it wasthe West necessary (U.S., toEU develop and NATO) a mechanism did not react that develop the appropriate measures. Action would, at least partially, compensate for Planoperation; also included solve regionalmeasures conflictsto strengthen and this passivity.39

35 R. Aliboni, “The Geopolitical Implications of the European Neighbourhood Policy”, European Foreign Affairs Review, Volume 10, No 1, Holland, Kluwer Law International, Summer, 2006, p. 3. 36 37 http://www.day.az/news/politics/63732.html.Достижения и Иллюзии Концепции Расширенной� Европы, http://dialogs.org.ua/ru/print/material/5/322. Евросоюз Подпишет Соглашения с Тремя Государствами Закавказья, 14.11.2006, 3839 Tomislava Penkova, “EU Eastern Partnership Policy: a Second Chance for the EU Transpormative Power?”, The EU EU/Azerbaijan Action Plan, http://ec.Europa.eu/world/enp/pdf/action_plans/azerbaijan_enp_ap_final_en.pdf. 2012, p.25. Eastern Partnership: Common Framework or Wider Opportunity?, edu. Carlo Frappi, Gulshan Pashayeva, ISPI, SAM,

UA: Ukraine Analytica · 2 (2), 2015 27 The EU Eastern Partnership Program membership of these countries, and on the other hand, creates new partners on its As a result of all these developments, the border in accordance with its wishes. new Eastern Partnership program was proposed by Poland with the support In order to achieve these objectives the of Sweden at the Prague Summit in May EU plans to deepen relations with partner 2009. The Eastern Partnership (EaP) is states: it offered policy instruments, a new an upgraded form of the NNP. Despite the type of new Association Agreement, and far- fact that the main goal of this program, reaching integration into the EU economy by as in the case of the NNP, is the export of forming the Deep and Comprehensive Free the EU rules and regulations to target Trade Area (DCFTA) with partner states. In countries, this program aimed to reach its addition, this program intends to encourage goals without offering the prospect of full mobility of partner states’ citizens, and to membership. This fact is very important this end the Eastern Partnership initiative because a number of states associated with the EU within the framework of the readmission agreements, later to be followed partnership have expectations regarding byoffers a visa-free in its first regime. stage visa facilitation and their full membership in the organization. In addition, countries such as Ukraine with the proposals of the EU, including Azerbaijan.However, not In short, all countries by the time were of the satisfied third the error of the EU, which is summit of the EaP in Vilnius, the six countries still trying to fit relations with of the former Soviet Union had advanced «Azerbaijan into a regional view differently in their relationships with the EU. This is because expectations and desires of based on a now inaccurate perception

than twenty years since their independence, these countries havesignificantly progressed varied. quite In a more long and Georgia are considering cooperation way, which eventually led to differences within the EaP as one of the stages towards among them. Herein lays the error of the EU membership. Consequently, countries included in the Eastern Partnership have Azerbaijan into a regional view based on a seriously criticized this policy due to the nowEU, which inaccurate is still perception. trying to fit relations with lack of new proposals and the prospect of membership. This discontent was Such was the situation on the eve of the expressed during the second EaP Summit Vilnius Summit, which was held from

short, Ukraine, Georgia, and Moldova were doubt, the state of affairs and the perceptions held in September 2011 in Warsaw. In ofNovember the partner 28th countries to 29th, affected 2013. Without the work a or “partner”, considering them excessively undertaken and results achieved. Summit neutralnot satisfied and not using implying the terms the “neighbour”prospect of results for partner countries were not integration.40 Azerbaijan considers that this program does not include the possible its own roadmap in relations with the EU. prospect of full membership, and sees it identical and each partner country defined only as a new instrument of EU foreign the EU’s readiness to offer a broader policy, which on one hand, prevents the perspectiveThis fact was to influenced partner countries,by several besidesfactors:

40 Tomislava Penkova, ibid., p. 26.

UA: Ukraine Analytica · 2 (2), 2015

28 the correspondence between the proposals and expectations, and Russia’s position. One of the drawbacks of EaP is that it does not include any Armenia, which originally intended to sign «political guaranties against the agreement, refused to do so literally on the Russia's negative reaction the threshold of the summit. Its rejection was announced during the visit of President Serzh Sargsyan to Russia on 3 September 2013, where he made a statement about policy, tried to negotiate appropriate deals his country’s readiness to join the Eurasian without overestimating their values and Customs Union, an organization initiated by opportunities. Taking into account the Russia. Being politically and economically potential geopolitical problems that may dependent on Russia, Armenia was forced arise from signing the agreement with the as soon as possible to drastically change the EU, Azerbaijan agreed to limit cooperation direction of its foreign policy. Ukraine also to the level that suits its national interests. refused to sign the agreement, but unlike The EU and Azerbaijan signed an agreement Armenia, this state expressed its opinion on visa facilitation at the Vilnius Summit in a few days before the Summit. Hence, 2013,43 and shortly thereafter, on 3 February the Ukrainian government temporarily suspended the process of preparation for agreement.44 signing the Association Agreement and 2014 the Azerbaijani parliament ratified the DCFTA and signed the documents later by One of the drawbacks of EaP is that it does the new after-revolutionary government.41 not include any political guaranties against the Russia’s negative reaction. The possible the outset that this country would not sign reaction of Russia is not taken into account. anyWith agreements regard to Belarus, with the it wasEU, knowndue to from the If any problems arise, it is not a direct fact that Belarus has close integration with concern of the EU. It is basically a feature of Russia and was a member of the Customs EU foreign policy towards the former Soviet Union with Russia and . This republics. EU does not want to deal with the precluded the possibility of participation possible geopolitical risks that could come in the two opposing integration processes from Russia. In this case, such challenges simultaneously.42 Only Georgia and Moldova are to be faced by EU partner-countries. joined the Eastern Partnership program.

Azerbaijan: to this day, there are discussions Azerbaijan expectations in relations aboutOne ofthe specificimplementation examples of the concerning Trans- with the EU Caspian pipeline to transport Turkmen natural gas to the European markets via the A different approach in its relations with South Caucasus and Turkey. In the EU, the the EU was taken by Azerbaijan. This project is regarded as purely commercial, country, in pursuing a balanced foreign despite the fact that it is of great geopolitical

41 Eastern Partnership: the way ahead, 02. 12.2013, http://www.eu2013.lt/en/news/statements/-joint-declara-

42 Belarus, 23.01.2014, http://www.easternpartnership.org/partner-states/belarus tion-of-the-eastern-partnership-summit-vilnius-28-29-november-2013 43 Strategic Eastern Partnership agreements signed in Vilnius, 29.11.2013, http://www.eu2013.lt/en/news/pressreleases/strategic-eastern-partnership-agreements-signed-in-vilnius- 44 http://news.day.az/politics/463521.html Азербай� джан ратифицировал Соглашение об упрощении визового режима с ЕС, 03.02.2013,

UA: Ukraine Analytica · 2 (2), 2015 29 importance. The EU does not accept the Tbilisi-Erzurum. Azerbaijan initiated and possible negative reaction of Russia and Iran, currently supports the construction of two and wants the project to be implemented regional gas pipelines: Trans Anatolian under the agreement between Turkmenistan Pipeline (TANAP) passing through Turkey, and Azerbaijan. It is impossible for geopolitical and the Trans Adriatic Pipeline (TAP) reasons, in connection with what the through Greece, Albania and Italy. In its question arises — whether the EU provides turn, the EU-supported projects Nabucco any security guarantees that would make and trans-Caspian pipeline have not been the implementation of this project possible. implemented. The EU’s response to this question does not exist. In the 1990-ies the implementation of Another example of functional cooperation such projects as the Baku — Tbilisi — Ceyhan would be signing the agreement on oil pipeline was only possible thanks to the political will and the support of the United which took force in September 2014. This States, without which the project would not willsimplified allow visa a greaterregime betweenintegration the parties,at the have been realized. movement of certain groups of people In this regard, the EaP for the EU is a desire concernedlevel of society, — instudents, this case —businessmen, a simplified to create a kind of buffer zone between tourists — which could also encourage Russia and the enlarged EU and to expand the integration at the community level, so common values to this area. Therefore, for people to people contacts will be increased. Azerbaijan EaP is a project, which does not meet its national interests and does not respond to its questions. Thereby Azerbaijan persuades the EU in following: for Azerbaijan EaP is a project, which does not meet First of all, it is to give up the regional «its national interests and perception of the EU in the framework of does not respond to its questions the EaP with respect to the six countries. Azerbaijan is inclined to the development of bilateral relations with the EU. Bilateral cooperation would be on a functional basis: In short, Azerbaijan is considering the areas in which relations would be formed possibility of cooperation and further integration with the EU in separate sectors implementation of the project further expansionshould be defined,and deepening in case ofof the the successful relations the EaP does not provide the necessary would be possible. platformwith their for further the successful diversification. development While of relations with all partner-countries, This format of relations between the Azerbaijan expects a new agreement on parties exists. The realization of energy and strategic partnership with the EU. Instead transport projects between the parties was of an Association Agreement within the EaP quite successfully promoted, but it is worth initiative, Azerbaijan is looking to conclude noting that Azerbaijan is more often an an agreement on Strategic Modernization initiator of these projects than the EU. Even Partnership. Azerbaijan hopes that the if we consider those energy projects that have been proposed by the EU, none of them the country that have been expressed above. has been fully implemented. Azerbaijan agreement will reflect the expectations of has initiated the construction of the Baku- Azerbaijan perceives the integration Tbilisi-Ceyhan and Baku-Supsa and Baku- processes if a series of conditions are met:

30 UA: Ukraine Analytica · 2 (2), 2015 the resolution of the Armenian-Azerbaijani for possible delegation of its political sovereignty,firstly, the existencewhat Azerbaijan of a rational will basisget conditions determine the strategy of instead. Secondly, the economic feasibility AzerbaijanNagorno-Karabakh with respect conflict. to any These proposed three of participation in integration processes. integration project. consists of oil and oil products. It is a commodity,For example, for 90% which of it Azerbaijan’s is not necessary exports to Dr. Rovshan Ibrahimov is an Associated Professor at as it is always in demand. In turn, there are Hankuk University of Foreign Studies (South Korea). He create a simplified format of trade relations, sectors of the Azerbaijan’s economy (such previously worked as the Head of Foreign Policy Analysis as agriculture, banking and insurance at Center for Strategic Studies under the President of sectors), which will be negatively affected Azerbaijan Republic. Dr. Ibrahimov is the expert in the number of strategic centers in Turkey, Russia, and Great Azerbaijan prefers primarily to build andby the strengthen simplification sectors of that the tradecan compete regime. Britain. Author on more than two hundreds articles and successfully in the international economy, comments. Research interest: Energy policy and security, and then to participate in integration Azerbaijan Foreign Policy, International Politics, projects. Finally, the third condition is how Theories of International Relations, Conflict Studies. the integration process will contribute to

UA: Ukraine Analytica · 2 (2), 2015 31