Ukraine and Germany: “Stumbling Points” and Relations Resume

Promote Ukraine presents the results of a joint study by the Center of New Europe and the Institute of European Policy (Berlin) “The priorities and expectations of Ukraine and Germany: How to make bilateral relations more sustainable.” In particular, after 2014, the relations between Ukraine and Germany received a new push. Berlin plays a key role in the EU’s solidarity regarding the sanctions policy, with Germany’s significant assistance to Ukrainian civil society. Germany is the third-biggest donor to Ukraine after the whole European Union and the United States.

The economic partnership of the two countries has also changed positively. According to Destatis (Federal Statistical Office of Germany), in 2019, exports from Germany to Ukraine reached 4.9 billion euros against 4.4 billion euros in 2017. A similar increase in import from Ukraine took place: from 2.2 billion in 2017 to 2.9 billion in 2019.

At the same time, the relationship was not free of tension.

In particular, the Nord Stream-2 gas pipeline has been a stumbling point since the beginning of the initiative. Recently, a misunderstanding in bilateral co-operation stemmed from the Parliamentary Assembly of the Council of Europe (PACE) decision, supported by Germany, to restore the powers of the Russian Federation.

Poroshenko and Zelensky in German format

During Petro Poroshenko’s presidency, Berlin’s support for deterring Russian aggression against Ukraine was a top priority for Germany.

Germany was interested in Ukraine as a country that, thanks to Angela Merkel‘s leadership and commitment, was able to impact at three levels of restraint at once.

The first level is the influence within Germany, primarily within the government coalition and among the business community, whose representatives from the very beginning questioned the appropriateness of sanctions against Russia.

The second is the influence on Russia, namely on President Vladimir Putin, using a direct channel of communication between the leaders of Germany and Russia.

The third level of restraint is the influence on the EU countries, primarily, in the matter of deterring sanctions against Russia.

Thus, the main priority regarding Germany during Poroshenko’s presidency was the transformation of Germany into an ally of Ukraine.

With Volodymyr Zelensky coming to power in Ukraine, the foreign policy focus has shifted from finding allies to finding investors.

Investments and investors as a new priority in relations with Germany were noted by a few interlocutors in the executive authorities.

The new focus has already become quite obvious through the preparations for the visits of Ukrainian officials to Germany. If during Poroshenko’s presidency the very fact of such a visit was crucial as the so-called symbol diplomacy, now, according to officials involved in preparing such visits, there should be three or four practical results of each foreign visit of the president or other Ukrainian officials.

“The requests for the president’s participation in events in Germany that have no practical added value decreased. Every visit, every participation is considered through a prism: what it will give us practically, what agreements, what investments, etc. Very specific questions are asked about our benefit in it,” the authorities say.

A challenge today is the need to audit German aid mostly because many initiatives were launched when Ukraine appeared in an incredibly difficult situation with the illegal annexation of Crimea and the beginning of the war in Donbas. In six years, the situation has changed, so Kyiv has a desire to review the efficiency of some programs and initiatives from the German side.

There are also reasons to believe that Angela Merkel’s position on the issues related to the situation around Ukraine was significant for Poroshenko more than for Zelensky.

In his actions, Zelensky focuses primarily on the reaction of Ukrainian society, rather than on the international community’s position. An example is the resignation of General Prosecutor Ruslan Ryaboshapka, despite the well-known G7 case to keep him in office.

To sum up, the strongest advantage of Ukrainian-German relations in the Ukrainian capital opinion is Berlin’s strong position, which holds the EU’s unity on issues related to deterring Russian aggression.

That includes the issue of sanctions against Russia, of “passportization,” of elections in the Crimea, and the preservation of sanctions against Yanukovych’s followers – all the areas where the Germans act “as the EU’s response locomotive.”

Cons in the relationship

The first con in the relationship is the reinstatement of the Russian delegation in the Parliamentary Assembly of the Council of Europe with German support. This, from the Ukrainian point of view, is the first step towards the collapse of the Western sanctions regime, as the Russian delegation returned despite Russia’s failure to comply with any Council of Europe resolution.

The second and most significant is the “Nord Stream-2.” The Ukrainian logic is, in particular, that the deterrence of Russian aggression is impossible under its indirect financing.

The Ukrainian capital also assures that German partners should not take offence at Ukraine’s support for US sanctions on “Nord Stream-2,” because Ukraine defends its own national interests there, not the United States’ interests.

Ukraine’s expectations

All Ukrainian stakeholders have concerns about future political changes in Germany. Probably Ukraine is a country where Angela Merkel’s departure from power is perceived as an extremely negative scenario.

There are growing concerns from authorities on how the dialogue between Ukraine and Germany  will develop without Angela Merkel. That is why there is a unanimous expectation from different authorities to resume the high-level intergovernmental consultations level that took place with President Leonid Kuchma and Chancellor Gerhard Schroeder to maintain a certain level of high political dialogue between the countries.

However, if in Kuchma-Schroeder’s time they took place every two years, Ukraine would offer to renew them on an annual basis.

The Ukrainian government pays special attention to the expectations related to Germany’s presidency in the EU. The reason is that Ukraine’s European integration priority this year is the Agreement on Conformity Assessment and Acceptance of Industrial Products signing, which is often called “industrial visa-free” with the European Union in Ukraine.

The Ukrainian authorities pay special attention to Germany’s expectations in resolving the conflict in Donbas. This mainly concerns Germany’s support of several key positions for Ukraine in the negotiation process, in particular, the modernization of the Minsk agreements.

There are also expectations among Ukrainian authorities that the Energy Efficiency Fund will continue its work after the results of a proper analysis and revaluation of German aid to Ukraine.

Despite Zelensky’s business focus in foreign policy, 95% of the dialogue with Germany at the highest level is the Donbas issue.

However, Kyiv notes that Germany’s support is not as strong as it used to be. In the offices, this is explained primarily by the fact that Germany has plunged into its domestic political crisis, connected with a rather complex process of power transit.

Accordingly, foreign policy issues, including Ukraine, have taken a back seat.

However, there are other factors on the German side. According to our interlocutors, who spoke anonymously, the Ukrainian capital connects a lower level of Berlin engagement with the fact that Ukraine questioned the Normandy format efficiency from the very beginning and rather relied upon bilateral agreements with Russia (the dialogue “Kozak-Ermak”) where the role of Germany is not always clearly articulated.

Meanwhile, such a scepticism did not hurt the Ukrainian side plans to initiate a process that would strengthen the presence of German (and French) partners at the talks in Minsk.

Generally, the expectations voiced in Kyiv in the Donbas context can be reduced to the following three points.

• Advocating the position on Minsk’s flexibility (especially taking into account the fact that Chancellor Merkel was the first of the Normandy format leaders who publicly talked about the “flexible Minsk” expediency – Minsk flexibility). The crucial point for Ukraine is the cordon control before the elections together with the foreign element.
• The access of humanitarian organisations (Red Cross) to the occupied territories, which was agreed at the Normandy Summit in Paris, but was not implemented.
• Pressure on Putin to facilitate the exchange of prisoners is the number one priority for Zelensky personally as president.

View from Berlin

In general, our interlocutors in Germany singled out two areas in the Ukrainian portfolio: Donbas and the reform process.

Although some respondents paid more attention to Donbas, in general, the issue of reforms was declared of equal significance. The reforms in the following areas were emphasised: economics, energy, the judiciary, and institutional development, which German support for Ukraine must have focused on.

However, the key reform in the Ukrainian context in Berlin is called decentralisation. In general, our interlocutors called this reform successful, as well as more or less irreversible.

Secondly, German support includes not only specific financial packages, but also specific initiatives in these areas and, sometimes, the high-level experts’ appointment for advisers’ roles.

In this context, it is also worth mentioning the active support of Ukrainian civil society since 2014.

Thirdly, Germany pursues its interests to some extent, especially in stabilising Ukraine and promoting economic growth, from which Germany, one of the biggest export countries, can also benefit.

Germany looks for a long-term partnership that provides opportunities for institutional cooperation and requires a certain level of predictability from Ukraine.

On the issue of reforms, the interviews also revealed that the leadership change in Ukraine, which resulted in the new president, parliament and government coming to power, was not perceived to be harmful for the co-operation.

For most respondents, the change of President Petro Poroshenko and President Volodymyr Zelensky coming to power were not a problem. In this context, the resignation of the government led by former Prime Minister Oleksiy Honcharuk is rather dangerous.

Ukraine’s scepticism about the role of international partners (especially IMF) was perceived quite critically in some German interviews and did not contribute to Ukraine’s image strengthening as a stable country looking for investors.

The German interlocutors also noted that the lack of judicial certainty lack, high production costs, the lack of skilled workers and the risks of regulatory non-compliance pose significant challenges for German companies to do business in Ukraine.

 

Alyona Hetmanchuk, director of the New Europe Center;

Lyudmyla Melnyk, Research Fellow, Institute of European Policy (IEP, Berlin);

Serhiy Solodky, First Deputy Director of the New Europe Center;

Susan Stewart, Acting Head of Eastern Europe and Eurasia Department of the German Institute of International and Security Affairs (SWP, Berlin).