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China?€™s Ukrainian Moves

Much of the discussion surrounding Viktor Yanukovych’s victory in Ukraine’s presidential election has been focused on whether his policies will be oriented more toward the European Union or Russia. Of course, significant changes are expected in foreign policy with the end of the Western-leaning policies of former Ukrainian President Viktor Yushchenko. But there is an equally important wild-card player that may have more influence on Ukraine than the West or Russia — China. ? 

Ukraine’s severe economic woes are one of the largest reasons why Kiev is so willing to court Beijing as a strategic partner. Many analysts thought that Russia would be Ukraine’s main source of bailout funds, but Moscow, despite its still-large foreign currency reserves, has plenty of its own economic problems to deal with. In addition, the economic relations between Russia and Ukraine have profoundly changed over the last few years, as Ukraine can no longer expect large energy subsidies from Russia. The European Union’s Eastern Partnership program will remain high on the Ukrainian agenda, especially for internal reforms, but the EU is also running out of money, and the EU members Greece, Romania, Bulgaria, Latvia and Lithuania are clearly ahead of non-EU Ukraine in line for whatever bailout funds remain.

It is expected that Ukraine will follow Moldova’s footsteps in strengthening ties with Beijing. In mid-2009, China offered Moldova a $1 billion loan, a considerable amount of money for an economy of only $8 billion. The funds will be channeled through China Overseas Engineering Group, China’s major construction firm. Considering the size of China’s loan and the size of Moldova, it is clear that Beijing’s dominant interests in the region are geopolitical. It is probably different in essence from what we have witnessed in other former Soviet republics, where raw materials have been a key feature. The opening in December of a large pipeline between Turkmenistan and China, which will carry gas from eastern Turkmenistan through Uzbekistan and Kazakhstan into China’s northwestern Xinjiang region, is a case in point. Similar activity has occurred in Africa and Latin America, where Beijing is accused of greedily seeking raw materials — petroleum, cobalt, platinum, timber and diamonds. In Ukraine, China’s rationale is not so much about exploiting resources but more about exporting know-how in terms of low-cost infrastructure.

Considering the huge need for financial resources in Ukraine, as well as the lack of support and capacity of traditional partners, the rise of China should come as no surprise. The two countries have already enjoyed a boom in bilateral trade since 2008, and this trend will undoubtedly be amplified. For many years, thousands of Chinese students have been going to Ukraine to complete their education. Moreover, whereas the EU usually attaches strong conditions when it offers loans, China is not very demanding in terms of human rights, environmental and social norms. The only condition that is non-negotiable is that the receiver country cannot recognize Taiwan.

Several steps have already been taken for a rapprochement between the two countries. At the end of October, then-Prime Minister Yulia Tymoshenko met in Kiev with Zhang Dejiang, a Chinese vice premier and a prominent leader of the politburo of the Chinese Communist Party. Ukrainian experts believe that the relationship between Ukraine and China will grow under Yanukovych. Cooperation is expected to grow particularly in manufacturing, science, technology, trade and culture. In the nuclear domain, the China Guangdong Nuclear Power Company and the Ukrainian National Nuclear Energy Generating Corporation Energoatom have already signed a memorandum of understanding.

The rising importance of China in Ukraine will have a direct impact on Moscow’s geopolitical position in all former Soviet republics.

China’s play in Ukraine could deliver a serious blow to Russia’s broader geopolitical plans of extending its sphere of influence in the post-Soviet area. Meanwhile, the key question in Kiev will be how to best adapt to this new dynamic.

Florent Parmentier is a fellow at the Center for European Studies at Sciences Po in Paris.

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