March 11, 2014
The state of play in Ukraine is still in the escalation phase and till the downward slope of the conflict there can happen many things. Every hour there is something new going on, bringing a new perspective on events and all analysis are updated constantly.
I do not intend to write another analysis article, not because it wouldn’t be useful, but because things are changing so quickly that I won’t finish the analysis and I’ll already have to rewrite it.
I propose you instead a different article, by which I want to open a debate on how Romania is affected, or will be affected by what is happening in Ukraine. Let’s identify future scenarios, possible Romanian actions and recommendations.
In the lines below I will underline some ideas that will focus on Romania, not on Ukraine. I will definitely not include them all, that’s why I’m asking for your help to complete this debate.
Ukraine – Romania’s gate to eastern markets
The Romanian economy needs new markets where it can expand in order to stimulate growth and development. The exports opening towards the European Union at a rate of about 70-75%, more correctly said the dependence to European Union, has slowed Romania’s growth, especially during the euro zone crisis.
Romania’s orientation to other non-EU markets can be a solution and a measure of economic growth for both Romania and the European Union as a whole. Here may be targeted the emerging markets, the Latin America economies and a very large eastern market.
Ukraine is a gateway for Romania towards the eastern market and, irrespective of a future stability scenario for Ukraine, the bilateral relationship should be set in these terms.
The major issues here are the instability state that tends to last and the unpredictable. In this context, the economic relations with the East are blocked and a possible new breakaway region, besides the instability in Transnistria and South Caucasus, can accentuate this blockage.
Here is where Romania can earn a lot. If Romania turns into a stability oasis in the region (and will be) and a bridge towards semiblocked markets, it will have full commercial benefits.
All these factors will weigh on foreign investors’ decision to come in the region. It is true that Romania’s security is guaranteed by NATO and the European Union, but its unstable neighborhood limits its ability to project investment in the region and towards East, one of the reasons why foreign investors choose Romania – because is a eastward gateway, towards the Middle East.
Preparing for subsequent involvement in the construction and revitalization of Ukrainian economy
Although it may seem too early, I assure you it’s not like that. Ukraine’s economy will actually start “from scratch” and Romania can capitalize on this situation. Preparing in advance, based on a correct view, will increase Romania’s chances of success.
Republic of Moldova near a new instability hotbed
The Republic of Moldova is a success story for the Eastern Partnership and for the enlargement process of the European Union, compared to Ukraine, insufficiently capitalized. The efforts done by Republic of Moldova in advancing westward were and still are difficult, but sustained and firm.
I should mention that before the Vilnius Summit, and after signing the Association Agreement by the Republic of Moldova, Russia made strong pressures, especially economic ones. Since nearly 29 percent of Moldova’s exports in the first half of 2013, worth over 322 million dollars, went in the Russian Federation, we can easily appreciate the impact of commercial blackmail started in August.
The period between the ratification of the Free Trade Agreement and its signature is a moment when major tensions and pressures may appear, especially economically, but also politically, because the current frozen conflict in Transnitria can be intensified through political, military and security evolutions in the region.
The same commercial blackmail has been applied to Ukraine. In August 2013 Russia blocked all imports of goods from Ukraine, compiling a list of risk where all Ukrainians manufacturers were noted.
Clearly, tensions in Ukraine are a danger to the Republic of Moldova, both because its neighbourhood is affected by a violent conflict and not long ago Moldova was in a similar situation (moreover, the negotiations on the status of the breakaway region Transnistrian haven’t been completed).
The impact on Romania’s relations with the Russian Federation
Maintaining Romania’s relationship with the Russian Federation on a path of dialogue in the context of the conflict in Ukraine can be a challenge (I prefer saying conflict in Ukraine and not in Crimea for not assuming there already has been a break). We must be aware that Russia is geographically close to Romania, it controls a large area of our neighborhood and the bilateral relationship cannot and should not be a hostile one.
The fact that we ask, together with our Euro-Atlantic partners, to be respected the integrity and territorial sovereignty of Ukraine should not mean that we want to suspend the dialogue and bilateral cooperation with Russia.
The relationship with Russia is an important one for Romania, requiring a pragmatic approach, pursuing economic interests.