Richard Balmforth: Jailing Tymoshenko could cost billions

SOUND economic interest means Ukrainian president Viktor Yanukovich will stick to pursuit of a place in Europe’s mainstream despite the West’s anger at the jailing of his opposition rival Yulia Tymoshenko.

The question is: will it still be on offer?

The former Soviet republic appeared on Wednesday to be standing again at an East-West fork in the road in terms of its future orientation after a trial which the European Union and the United States say was politically motivated.

On the face of it, EU condemnation of the seven-year sentence imposed on Ms Tymoshenko could alienate a leader who has already tilted policy towards Moscow and perhaps push him further into the Kremlin’s arms.

But while Mr Yanukovich has taken important steps to improve relations with Russia, notably granting a 25-year extension to the presence of its Black Sea fleet in Crimea, he has resisted overtures to join a Russia-led Eurasian customs union and has stressed European integration as a policy priority.

Most analysts say he will hope to ride out the EU’s displeasure, possibly appeasing European leaders by finding a way to secure Ms Tymoshenko’s early release, and press ahead with steps towards a trade deal with Europe despite risking the ire of Russia – the main supplier of gas to Ukraine and Europe.

The creation of a free-trade zone with the EU, a key part of a wider association agreement, holds out huge opportunity for Ukraine, an exporter of steel, chemicals and grain, and for the industrialists who are important backers of Mr Yanukovich.

“The free trade zone with the EU will bring Ukraine in every year £19 billion against £5.7bn from the customs union,” said analyst Taras Berezovets of Berta Communications.

But much still depends on how the European Union reacts as a bloc in the coming weeks.

EU foreign policy chief Catherine Ashton, in a tough message, said the trial of Ms Tymoshenko smacked of “selective justice”.

It had profound implications for “conclusion of the Association Agreement, our political dialogue and our co-operation more broadly,” Lady Ashton said.

One Kiev-based EU diplomat said members of the 27-state union were re-assessing policy towards Ukraine and this would soon be spelled out to Mr Yanukovich’s administration.

The Ukrainian leader is himself scheduled to visit Brussels on 20 October, when the EU diplomat said he would hear “some unfiltered language” from European Commission president Jose Manuel Barroso.

As things stand, the two sides are scheduled to hold a summit in December for conclusion of an association agreement.

This now, however, appears to be in jeopardy since Ms Tymoshenko’s jailing means the agreement will not secure ratification by parliaments in several EU member states or by the European Parliament itself.

Ms Tymoshenko was jailed for “criminally” exceeding her authority as prime minister in 2009 by forcing through a ten year gas contract with Russia which Mr Yanukovich’s government says has saddled the country with an excessive price for gas.

Russian prime minister Vladimir Putin, who negotiated with Ms Tymoshenko on that deal while he was president, criticised her jailing, saying it was “dangerous and counter-productive” to cast doubt over their agreements.

Most commentators find it hard to imagine Mr Yanukovich will want her still in jail next year when Ukraine co-hosts the Euro 2012 football tournament, a chance to showcase the advances Ukraine has made since it became independent 20 years ago after the collapse of the Soviet Union.

But whether he will dare allow her to ever become politically active again, given her populist power as a politician, is more open to question.