DOCTORAL (Ph.D.

)
DISSERTATION

Daniel Haitas

Debrecen 2019
 UNIVERSITY OF DEBRECEN
GÉZA MARTON DOCTORAL SCHOOL OF LEGAL
STUDIES

THE EUROPEAN UNION’S EXTERNAL

RELATIONS WITH RUSSIA AND UKRAINE

Candidate:

Daniel Haitas

Supervisor:

Dr. habil. Ildikó Bartha Ph.D, Associate Professor of Law

Doctoral Program: Changes of State and Law in Central- and Eastern-Europe

Head of the Doctoral School: Prof. Dr. József Szabadfalvi, DSc, Professor of law

Manuscript completed on 1 June 2019.

DEBRECEN 2019
 TABLE OF CONTENT

ACKNOWLEDGEMENTS .................................................................................................... 3

INTRODUCTION .................................................................................................................. 5

CHAPTER 1. THE EUROPEAN UNION’S NEIGHBOURHOOD POLICY AND

EASTERN PARTNERSHIP ................................................................................................. 15
1.1 Partnership and Cooperation Agreements ........................................................... 15
1.2 The European Neighbourhood Policy (ENP)........................................................ 16
1.3 Economic and Political Dimensions of ENP ......................................................... 18
1.4 The Eastern Partnership ....................................................................................... 21
1.5 Instruments of the European Neighbourhood Policy and the Eastern
Partnership .................................................................................................................. 23

CHAPTER 2. THE LEGAL FRAMEWORK OF EUROPEAN UNION-RUSSIA

RELATIONS......................................................................................................................... 27
2.1 The European Union-Russia Partnership and Cooperation Agreement ............. 27
2.2 ‘Four common spaces’ – ENP and Common Strategy ......................................... 32
2.3 European Union-Russia Energy Relations ........................................................... 36
2.4 Case Study: Hungary’s and Russia’s Energy Relations in Light of Obligations
under the EU Energy Acquis....................................................................................... 51

CHAPTER 3. THE LEGAL FRAMEWORK OF THE EUROPEAN UNION’S

RELATIONS WITH UKRAINE .......................................................................................... 61
3.1 The European Union-Ukraine Partnership and Cooperation Agreement ........... 61
3.2 Action Plans and Ukraine ..................................................................................... 65
3.3 The European Union-Ukraine Association Agreement ........................................ 67
3.4 Ukraine and the Legal Approximation to the Energy Acquis of the European
Union and New Developments with regards to Gas Importation .............................. 89
3.5 Case Study: Hungary and Certain Aspects of Ukraine’s European
Integration ................................................................................................................. 104
CHAPTER 4. THE EUROPEAN UNION’S RESTRICTIVE MEASURES REGIME
AGAINST RUSSIA............................................................................................................. 109
4.1 Background to the Events in Crimea and the Donbass ...................................... 109
4.2 Reaction of the European Union ......................................................................... 113
4.3 Russia’s Response ................................................................................................ 117
4.4 The Court of Justice of the European Union and the European Union’s
Restrictive Measures Regime .................................................................................... 118
4.5 Possibility of Lifting the Sanctions ...................................................................... 124

CHAPTER 5. THE EURASIAN ECONOMIC UNION, THE EUROPEAN UNION AND

UKRAINE ........................................................................................................................... 127
5.1 Overview of the Eurasian Economic Union’s Formation ................................... 127
5.2 Main Objectives and Principles .......................................................................... 129
5.3 Institutional Structure ......................................................................................... 130
5.4 Nature of Eurasian integration ........................................................................... 131
5.5 Ukraine and the Eurasian Economic Union ....................................................... 133

CONCLUSIONS ................................................................................................................. 140

BIBLIOGRAPHY ............................................................................................................... 144

2
 ACKNOWLEDGEMENTS

It goes without saying that the author of this work received much invaluable aid, support and
assistance from a myriad of people in the preparation of this work over the last few years, and so
it is appropriate in the beginning to acknowledge these various individuals. Unfortunately, in this
short space it is not possible to give thanks to all those who have been of invaluable assistance to
me on the road of life, including various family members, friends, colleagues, teachers, mentors,
elders, students, acquaintances, and kind strangers, without which any modest success I may have
achieved so far in my various endevours simply would not have been possible, and so I ask for
forgiveness for any omissions which may follow.
First of all, I am obliged to pay my respects to my family. I give honour to all my ancestors,
both those who are living and those who have entered into their rest. I wish to mention my
grandparents, who supported me and whose pride I was always fully aware of. I would like to pay
respect to my parents. I must particularly make mention of my mother. All my life she has been
my greatest supporter and source of comfort. Her faith, constant encouragement and strength have
been a major foundation of my life, and continue to be. This work is particulary dedicated to her.
I must also make special mention of my brother and his wife, who have been a great source of
companionship and support for me.
I would like to thank my supervisor, Dr. habil. Ildikó Bartha, Associate Professor of Law,
Faculty of Law, University of Debrecen. Her expert knowledge has helped to guide me throughout
the process of writing this dissertation, and I am grateful that I was able to find a superviser
possessing this knowledge and capable of leading my down the appropriate road during the course
of my research. Her patience, care, kindness and friendship has been invaluable to me during the
process, and is also something that I am grateful for. I thank her again for agreeing to take on the
task of being my superviser, and hope that I was able to fulfil the expectations which she had of
me.
I must also make a special mention of Prof. Dr. Ernő Várnay, Head of the Department of
European and International Law, Faculty of Law, University of Debrecen. His support, interest
and wisdom has been of great assistance to me during the course of research, and for that I am
grateful.

3
 I wish to make special mention of the Géza Marton Doctoral School of Legal Studies,
Faculty of Law, University of Debrecen, under whose auspices this dissertation was written. I
particularly would like to mention Prof. Dr. Tamás M. Horváth, Doctor of the Academy of
Sciences, Judge of the Hungarian Supreme Court and former Head of the Doctoral School; Prof.
Dr. József Szabadfalvi, Doctor of the Academy of Sciences and present Head of the doctoral
school; Prof. Dr. Béla Szabó, the Programme Leader of the doctoral school and Dr. Marton
Zaccaria, Assistant Professor of Law, and Secretary of the doctoral school. They have consistently
been supportive, helpful and patient throughout my time as a PhD student and candidate, and for
this I am very grateful.
I would also like to express my thanks to Prof. Dr. Veronika Szikora, Dean of the Faculty
of Law, University of Debrecen. I have appreciated the kindness, help, support and care she has
shown me, and wish to thank her for this.
I would like to mention the Vice-Deans of the Faculty of Law, University of Debrecen, Dr.
habil. Tamás Fézer, and Head of the Department of International Communications, and Prof. Dr.
Mátyás Bencze, both of whose friendship and support over the last years have been invaluable to
me, and for this I would like to thank them.
I would also like to express my very deep gratitude to all my other colleagues and friends
at the Faculty of Law, University of Debrecen, who have not been mentioned here. I will always
be thankful for all your support and kindness. It has been my great privilege to be connected to the
life and workings of the Law School, and I am grateful for the fact that I have been made to feel
very welcomed and at home. This is in large part connected to these colleagues and friends I have
mentioned, who in so many cases have been of assistance and help to me in relation to many
details, both relating to matters trivial and of greater importance.
Finally, I would also like to pay a special thanks to my various students from over the
years, who it has been my pleasure to teach and guide within the limits of whatever competences
and abilities I might possess. At times I was able to share the results of my research with them in
various different formats and situations, and their interest and support was apparent and much
appreciated, and I would like to wish them all the very best for the future, both in their personal
and professional lives.

4
 INTRODUCTION

i) Aims and scope of the dissertation

This dissertation explores the European Union’s external relations with Russia and Ukraine. 1 This
involves examining the basic legal, institutional and political framework that comprise these
relations, focusing on various relevant salient features. The author has chosen to examine both
Russia and Ukraine’s relationship to the European Union due to the closely connected nature of
the two countries over history, the fact that their relationship to each other influences their
relationship with the European Union, and that these two countries are of great importance to the
European Union’s external relations policy. The modern states of the Russian Federation and
Ukraine claim their roots in the ancient Kievan Rus whose ruler Grand Prince Vladimir of the
Rurik dynasty adopted Byzantine Eastern Orthodox civilization in 988 A.D, which still plays a
fundamental role in the life of these modern states.2 In the modern era, apart from experiencing a
brief period of statehood from 1917 to 1921, it was only in 1991 that Ukraine a fully independent
country.3 Previous to this, it had been part of both the Russian Empire and the Soviet Union. 4 After
the 2004 enlargement, Ukraine become one of the largest and most strategically vital neighbouring

1
The author would like to state that this dissertation draws from the results of the research conducted by him over
time, specifically the following publications: Ukraine's attempts at legal approximation to the EU's energy acquis and
changes in its gas importation practices, Acta Universitatis Szegediensis: Acta Juridica et Politica 6 : 2 pp. 93-107,
(2016), Early steps from Kiev towards Europe: An overview of formative agreements between Ukraine and the
European Union, JURA 23 : 2 pp. 306-314, (2017), Additionally, the author would like to note that the dissertation
draws from the results of research and studies conducted in the context of the DE-ÁJK Governance Resource
Management Research Group of the National University of Public Service, in the framework of the project 'A jó
kormányzást megalapozó közszolgálat-fejlesztés' [Public Service Development for Good Governance] No. KÖFOP-
2.1.2-VEKOP-15. For the description of the underlying concepts, see: T.M. Horváth and I. Bartha (eds.)
Közszolgáltatások megszervezése és politikái. [The Organization and Sectors of Public Service Delivery], Budapest:
Dialóg Campus, 2016. The relevant studies conducted in the context of this research group include the monograph
Aspects of the European Union’s Legal and Political Relations with Russia and Ukraine to be published in the future;
the article Eurasian Integration and Ukraine, Jog-Állam-Politika: Jog- és Politikatudományi Folyóirat (2018) 10 : 2
pp. 179-192; Aspects of Energy Relations Hungary-Russia Energy Relations in the Context of European Union Law,
JURA, 2018/2, 368-377; and the article to appear in the future in Jog-Állam-Politika entitled Issues in European Union-
Russia Energy Relations. Additionally, the research draws from the author’s article Ukraine and China’s Belt and
Road Initiative, Scientific Journal of the Lviv University of Trade and Economics: Jurisprudence Series, 2018 (6) 232
-238.
2
SOROKA, George (2018): Blessings and Curses from Constantinople, Foreign Affairs, 25 October 2018,
https://www.foreignaffairs.com/articles/ukraine/2018-10-25/blessings-and-curses-constantinople (Accessed
2018.11.12)
3
SAKWA, Richard (2015): Frontline Ukraine: Crisis in the Borderlands, I.B Tauris, London, New York, 2015, 7, 9.
4
PIONTEK, Eugenius (2006): Ukraine. In BLOCKMANS, Steven, - LAZOWSKI, Adam (eds.), The European Union
and its Neighbours: A Legal Appraisal of the EU’s Policies of Stabilisation, Partnership and Integration, T.M.C Asser
Press, The Hague 2006, 500.

5
states of the European Union. 5 To illustrate the importance of the country’s location, historian
Andrew Wilson wrote that “Ukraine occupies a crucial space at the crossroads of the two great
geopolitical ideas of the twentieth century - ‘Europe’ and ‘Eurasia’ - and will have a crucial
influence on how both these ideas are being reconstructed at the beginning of the new
millennium.”6 As for the Russian Federation, which amounts to over an eighth of the Earth’s
landmass, 7 and with its vast energy resources, powerful military, large population and political and
cultural influence means that countries around the world must articulate specific policies and aims
with regards to engaging with this country, which is particularly the case with regards to the
European Union, which has so many connections to this state. It can be fairly safely asserted that
there are few relationships more important for the two entities than their relationship to each other.

ii) Conceptual and theoretical framework

Naturally, it is necessary to provide a certain theoretical and conceptual background and basis to
the dissertation. One important theoretical and conceptual area of relevance relates to the processes
of regional integration projects, in particular with regards to the development of the European
Union. The European Union is a unique regional integration project and model which has its roots
in the aftermath of the devastation of World War Two, which led to the states of Western Europe
incrementally moving towards a certain degree of political and economic integration. This process
continued to evolve, coming to include different parts of Europe, having progressed to what has
been termed an “ever closer union”. This union is based on certain central characteristics which
can be said to define its nature and character. Fundamental to this is the process of collective
institutionalized decision-making, with the key bodies being the Commission, Council, Courts and
Parliament.8 A major impetus to the entire European integration project from its very beginning
has been the economic development and integration of the continent. 9 This has involved various
elements over time which have developed, one of the most fundamental being the European

5
PIONTEK (2006): i.m., 500.
6
WILSON, Andrew (2009): The Ukrainians: Unexpected Nation, Yale University Press, New Haven and London,
2009, 279.
7
International Business Publications (2011): Russia: Foreign Policy and National Security Yearbook – Volume 1:
Strategic Information and Regulations. Washington DC, International Business Publications, 2011, 8.
8
CINI, Michelle (2007): Introduction. In CINI, Michelle ed: European Union Politics, (2nd edition), Oxford
University Press, Oxford, 2.
9
Ibid, 3.

6
Union’s Single Market which is based on the four freedoms, that is the free movement of labour,
goods, capital, and services.
Over time various models have been put forward that seek to articulate conceptual
frameworks for the broader European integration process. These attempt to deal with such issues,
among others, as to the reason certain states join regional organizations and hand over certain
aspects of their political powers and authority; the way in which they these integration projects
develop in terms of increasing their powers, and their enlargement to include new member states;
and the way in which they influence and effect the countries in their specific regions. 10 Three
prominent models which have been put foward seeking to explain the process of European
integration are intergovernmentalism, neofunctionalism and also postfunctionalism. 11 As shall be
seen over the course of this dissertation, the three models, each in their own way, can act as aids,
at various points, in understanding certain elements of the subject matter of the topic at hand,
sometimes with one particular model being exclusively relevant, and other times a mixture of these
conceptual frameworks being utilized in order to explain certain developments, facts and
phenomena. In addition to being of value with regards to understanding certain regional integration
structures and their internal nature, as shall be seen it can also be of value in understanding how
the European Union relates to non-Member States within the context of its external relations
policies and actions.
Intergovernmentalism gives a special role to the nation state in integration projects, and
argues that the European integration process has not made the nation state obsolete.12 Furthermore,
these specific nation states attempt to increase their economic interests and security within the
broader process of regional integration. 13 This is a model of integration which may be described
as being state-centric. 14 According to this particular conceptual framework, nation states retain

10
SCHIMMELFENNIG, Frank (2018): Regional Integration Theory. In Oxford Research Encyclopedia of Politics,
Oxford, Oxford University Press (Pre-publication version of article) 1,
https://www.researchgate.net/profile/Frank_Schimmelfennig/publication/325392599_Regional_Integration_Theory/
links/5b0af3560f7e9b1ed7f9c9e3/Regional-Integration-Theory.pdf?origin=publication_detail (Accessed 2019.02.17)
11
Ibid.
12
HATTON, Lucy (2011): Theories of European Integration, CIVITAS Institute for the Study of Civil Society, 2011
(last updated 2015), https://www.civitas.org.uk/content/files/OS.16-Theories.pdf (Accessed 2019.02.14)
13
SCHIMMELFENNIG (2018): i.m., 1.
14
CINI, Michelle (2016): Intergovernmentalism. In CINI, Michlle - PÉRES-SOLÓRZANO BORRAGÁN, Nieve
eds.: European Union Politics, Fifth Edition, Oxford, Oxford University Press, 66.

7
control of the institutions and organizations which result from integration processes, and seek to
utilize regional organizations in order to obtain bargaining outcomes. 15
Neo-functionalism, which was particularly popular in the 1950s and 1960s,16 rather places
special emphasis on supranational actors and structures themselves, believing that they can make
independent decisions and shape the actual process of integration according to their specific
interests.17 It is an approach which argues that nation states are not the only key actors in world
politics, and thus places a special focus on both supranational institutions as well as non-state
actors.18 It is a model which gives less influence to the nation states than the intergovernmental
model, claiming that governments are not truly in control of integration, and that the integration
process leads to what have been termed “spillovers”, which leads to the integration process going
beyond mere intergovernmental bargaining. 19 This model holds that these spillovers actually lead
to the process of European integration being a self-sustaining process, leading to the creation of a
new supranational political community. 20
Finally, postfunctionalism points out and highlights the backlash that can occur as a result
of the integration process, which is connected to such factors as a decrease in national sovereignty,
leading to scepticism about the integration process, fuelling in response certain eurosceptic
political movements.21 This can lead to an impediment to the intergration process, or even eventual
disintegration.22 These models are of value with regards to the subject of this dissertation, and thus
shall be utilized accordingly where it is deemed appropriate.
Another theoretical model relating to integration theory with regards to the European
Union’s relations with third countries which will be utilized in this dissertation is the concept of
“external governance”. 23 This is a concept which seeks to explain the way in which the way in
which the European Union is able to expand its influence and export its norms and values (which,
of course, is connected to the status of the European Union as an international actor in its own

15
SCHIMMELFENNIG (2018): i.m., 2.
16
HATTON (2011): i.m.
17
SCHIMMELFENNIG (2018): i.m., 2.
18
JENSEN, Carsten Stroby (2016): Neo-functionalism. In CINI, Michlle - PÉRES-SOLÓRZANO BORRAGÁN,
Nieves, European Union Politics, Fifth Edition, Oxford, Oxford University Press, 53.
19
SCHIMMELFENNIG (2018): i.m., 2.
20
HATTON (2011): i.m.
21
SCHIMMELFENNIG (2018): i.m, 2
22
Ibid.
23
LAVENEX, Sandra (2004): EU External governance in ʿwider Europe’, Journal of European Public Policy, Vol.
11, No. 4, 683, https://archive-ouverte.unige.ch/unige:77032 (Accessed 2019.02.10)

8
right), often at times with a focus on integration and bringing about closer relations without
necessarily offering the third countries involved an explicit membership perspective, which is also
a result of the consequences of the great eastern enlargements of the European Union, which led
to a certain fatigue in in this area.24 External governance in this context has been defined as
occuring: “...when the institutional/legal boundary is moved beyond the circle of member states ...
the crucial criterion for external governance is the extension of the legal boundary of authority
beyond institutional integration. In contrast to cooperation under an international agreement or
convention, external governance takes place when parts of the acquis communautaire are extended
to non-member states.”25 It shall be seen that in certain particulars Ukraine can be considered as
an object of the EU external governance, the country in many ways now being formally committed
to conforming to the norms and values of the European Union, despite not being promised an
explicit membership perspective. As shall be seen, this contrasts markedly with the nature of the
EU-Russia relationship, with the latter being resistant to such a model of relations.

iii) Subject matter of the analysis

As to the actual content of the dissertation, naturally, when dealing with such an enormous topic,
the author has necessarily had to be selective in relation to the material to be dealt with. Thus,
several key topics have been chosen for exploration with the hope of illuminating vital areas
relating to the European Union’s external relations with Russia and Ukraine. These areas have
been selected due to their central importance to the topic at hand, as in many ways they provide
the overrall framework, contours and broader context of these relations. The dissertation begins
with an overview of the European Neighbourhood Policy (ENP), including the historic context in
which it was brought into being, its scope and aims, as well as its economic and political
dimensions. The ENP’s Eastern dimension, the Eastern Partnership, will also be introduced at this
point, which offers the main framework for the European Union’s external relations with its
Eastern European neighbours. The legal instruments within the framewok of the ENP and Eastern
Partnership will be surveyed, including the concept of Action Plans and Association Agreements
which are able to be signed between the European Union and partner countries.

24
CAMPAIN, Marie (2012): Avoiding new dividing lines? EU external governance and the Eastern neighbours. In
STADMÜLLER, Elzbieta – BACHMANN, Klaus eds: The EU’s Shifting Borders: Theoretical approaches and policy
implications in the new neighbourhood, London and New York: Routledge, 2012, 120; LAVENEX (2004): i.m., 683.
25
LAVENEX, Ibid.

9
 This is then followed with the section on European Union—Russia relations, which
includes looking at the Partnership and Cooperation Agreement signed between the two, the
Common Strategy on Russia and the Four Common Spaces. It should also be stated that there are
other agreements which have been signed between the European Union and both the Russian
Federation and Ukraine which are beyond the scope and subject matter of the dissertation, and thus
will not be analysed here. The section on Russia is followed by Ukraine, including its major legal
instruments signed with the European Union, in particular the Partnership and Cooperation
Agreement and later the Association Agreement. One of the main propositions of this dissertation
is that there is a substantial difference as to what degree Russia and Ukraine wish to integrate with
the European Union, which is perhaps best reflected in the differing legal frameworks both have
put in place with the European Union to govern their relations. As shall be seen, Russia does not
seek a large-scale approximation to European Union standards and norms, while, in contrast to
this, Ukraine, in particular with the signing of the Association Agreement with the European
Union, has committed itself to a deep integration with the European Union, and in fact, that country
has strongly professed a desire to one day achieve full membership of the organization. 26 As shall
be seen in the case of Ukraine, a mechanism has been created where non-EU Member States can
participate to a certain extent in this Single Market through the creation of a Deep and
Comprehensive Free Trade Area (DCFTA), which is a feature of the so-called “new generation”
Association Agreement signed by Ukraine, as well as Georgia and Moldova. The aims of the
agreements signed between the European Union and the Russian Federation can be said to be less
ambitious in this regard, which aimed rather at granting most-favoured-nation status to the country
and to begin the process of establishing a free trade area.
An extremely important factor in the EU’s relations with both Russia and Ukraine relates
to energy. With regards to EU-Russia energy relations, the author’s examination shall include
surveying such gas pipeline projects as OPAL, South Stream, Turkish Stream and Nord Stream 2.
This shall include legal issues raised that have or could inhibit these projects operating on the
territory of the European Union. Additionally, there shall be a survey of attempts by the EU and
Russia at coming to some sort of overaching legal framework of energy relations. An example in

26
RadioFreeEurope/RadioLiberty (2019): Ukraine President Signs Constitutional Amendment on NATO, EU
Membership, 19 February 2019, https://www.rferl.org/a/ukraine-president-signs-constitutional-amendment-on-nato-
eu-membership/29779430.html (Accessed 2019.06.07)

10
this dissertation of the external governance model at work relates to Ukraine’s attempt at
approximating to the European Union’s energy acquis communautaire, which involves making
Ukrainian legislation in this particular area compatible with the norms and standards of the EU.
This is connected to Ukraine’s membership of the Energy Community, which was created in part
to incorporate certain third countries in Eastern Europe into the European Union’s internal energy
market. In contrast, Russia does not follow the principle of conforming to the EU’s energy acquis
according to the model followed by such countries as Ukraine.
The dissertation also includes an analysis of the restrive measures placed on Russia by the
EU as a result of events in Crimea and East Ukraine, and also Russia’s reaction in response to this
development. As part of this anaylsis, there will be an examination of the relevant legal background
of restrictive measures and sanctions as a tool of EU external relations, and how events in Crimea
and East Ukraine, and the subsequent sanctions, have impeded EU-Russia relations. This will
illustrate how events in Ukraine directly impact Russia-EU relations. It is undeniable that the
restrictive measures are a major factor in the present relations of the European Union and Russia,
and by their very nature they have caused certain difficulties in bilateral relations. As such, it can
be said that the state of Russia-Ukraine relations, and the present tensions that exist between both
countries also has an effect on the relationship of the European Union with these individual states,
and can influence the degree to which it may maintain and intensify these connections.
Furthermore, the dissertation contains an analysis of important cases that have come before the
European Court of Justice and General Court of the European Union which deal with the European
Union’s sanctions against Russia. This overview will highlight the importance of the Court of
Justice of the European Union in relation to the development and articulation of the European
Union’s external relations policies and actions.
Russia has sought to create an alternative model of integration in the post-Soviet space,
which is the Eurasian Economic Union. This is both a competitor to the EU in certain ways and in
certain areas, but also, at the same time, draws inspiration from the EU as well, to a certain extent
even mirroring it in various particulars. In this dissertation it shall be seen in which ways the EU
acts as a source of inspiration and competitor to the Eurasian Union. This shall involve looking at
the major charactersitics of the Eurasian Economic Union, and to a certain extent the way in which
it is similar and different to the European Union. One aspect of this is that it shall be argued that
on the whole the Eurasian Economic Union represents an intergovernmental model of integration.

11
The extent of integration which has taken place so far and the nature of its institutions justifies this
assertion, as they reflect the ultimate importance of the nation state in the process and the
maintenance of its centrality during the course of Eurasian integration. However, at the same time,
it must be admitted that a very real supranational structure and regional organisation has come into
being with defined competences and powers. Another area examined in this work is the European
Union’s Eastern Partnership, which may be considered in certain respects as a rival to the Eurasian
Economic Union integration project. A scene of competition between the EU and the Eurasian
Economic Union has been Ukraine, and so there shall be an analysis of Ukraine’s relationship to
Eurasian integration and also to the EU’s Eastern Partnership initiative, which is the iniative that
has sought to bring post-Soviet states closer to the European Union.
It seems self-evident that one who creates such a work has the hope that it will be of at
least some relevance and utility. It is the wish of the author that this work will contribute on some
level to increasing the knowledge of a subject of great importance and significance to the whole
of the European and Eurasian space. Considering that the author had the opportunity to carry out
his research in Hungary (an opportunity for which he is very grateful), he particularly harbours the
hope that the fruits of these endeavours will be be considered of some relevance and use for
interested people in the country, considering its location in a vital part of this geopolitical space
and which has played an historically crucial role within it, and which continues to do so. As a
result, there shall be two case studies involving Hungary, one relating to Hungary-Russia energy
relations, and the other relating to Hungary-Ukraine relations. In relation to the former, there is an
examination of the expansion of the Paks nuclear facility. As shall be seen, there had been concerns
raised by the European Commission in relation to this project, however these were able to be
overcome. It can be argued that in this instance we see both an assertion of independent action by
a European Union Member State, here Hungary, pursuing its own course of action which it
believes is in its interests. This may be seen as being linked to the intergovernmental model, with
its focus on the importance of nation states. At the same time, the eventual involvement of the
European Commission, its investigation, and the need for it to confirm the validity and correctness
of the agreement echoes the neofunctionalist conceptual framework, with its emphasis on the
importance of supranational actors and structures themselves.
In relation to Hungary and Ukraine, there shall be a brief case study relating to areas of the
bilateral relationship that the author believes also has a relevance to Ukraine’s broader relationship

12
with the European Union. This section shall include certain background information on Hungary
and Ukraine’s relationship, and two specific areas relating to this relationship, these being
Ukrainian citizens being granted visa-free travel to the EU, and Ukrainians access to the labour
markets of EU Member States, and Hungary’s possible relation to this.

iv) Methodology
The primary scientific tools of the work include formal legal analysis and the comparative method.
The former is employed in the sense of presenting and analysing key legal texts and instruments
relating to the topic, including the aims, goals, commitments and obligations which they contain.
However, it should be noted that it goes beyond what some may consider as a more conventional
analysis. Naturally, the dissertation deals with and seeks to explain the legal basis of the European
Union’s legal actions (in relation to the Russian Federation and Ukraine) according to the relevant
primary and secondary legal sources of the European Union, examining the legal framework of
the European Union’s relations with both these state entities. This includes looking at their
respective Partnership and Cooperation Agreements, and later Ukraine’s recent Association
Agreement with the European Union. Furthermore, the most relevant aspects of these agreements
shall be examined, illustrating their fundamental nature, including their core aims, values and
purpose, as well as their structure. However, there is a strong emphasis on exploring and providing
the relevant background, where appropriate, to the formation of the relevant legal instruments,
actions and frameworks that are analysed and explored here, with this acting somewhat as the
foundation of the analysis. The author believes that it is vital to understand the historical and
political context in which these were brought into being and developed over time. Thus, the
dissertation includes surveying the background leading and contributing to the coming into being
of the major legal instruments signed between the European Union and both Russia and Ukraine
examined in the dissertation, such as the Partnership and Cooperation Agreements and Association
Agreement, energy relations between the EU and the two respective states, the events leading to
the imposition of the restrictive measures regime on Russia by the European Union, and the
formation and coming into being of the Eurasian Economic Union. Thus, it can be said that the
relevant legal instruments and actions in the dissertation are analysed as being concrete
manifestations and expressions of these various historical and political factors.

13
 The comparative method is utilized here in order to illuminate and illustrate the essential
differences between the European Union’s relations with the Russian Federation on the one hand,
and Ukraine on the other. The author believes that including both of these countries in this
dissertation makes the work of greater interest than if only one country had been focused upon,
because they provide very rich comparative material, illustrating the different goals and
approaches in the way certain third countries which to interact with the European Union, and also
the way and degree to which the EU wishes to engage and partner with. Here there shall be an
analysis of the degree to which the EU has sought to partner with the Russian Federation and
Ukraine, the historical development relating to this, and where matters stand at the present time
with regards to this. Included in the comparison is, where appropriate, the utilization of the above
mentioned theoretical models and frameworks when discussing EU-Russia and EU-Ukraine
relations, attempting to apply these theories to the EU’s relations with these third countries. This
also involves surveying the motivations of these third countries when engaging the EU, which has
a particular relevance in the case of Ukraine.
The dissertation, in addition to legal analysis, also incorporates a political science and
historical approach to the subject at hand. This includes surveying the relevant historical and
political background to the legal agreements and framework of the EU’s relations with Russia and
Ukraine. This means, in addition to relevant legal texts and academic literature, utilizing various
policy papers from the EU institutions, reliable and reputable authors and journalistic sources
dealing with the subject matter and which deal with positions and actions of the various political
actors of importance to the topic.

14
 CHAPTER 1

THE EUROPEAN UNION’S NEIGHBOURHOOD POLICY AND EASTERN

PARTNERSHIP

1.1 Partnership and Cooperation Agreements

Before discussing the European Neighbourhood Policy and Eastern Partnership, it is important to
examine the nature of the European Union’s engagement with its post-Soviet Eastern neighbours
during the time predating those initiatives, specifically focusing upon the Partnership and
Cooperation Agreements, which then acted as the main basis for the EU’s engagement with those
particular countries.27 The European Union, despite the fact that it is composed of 28 independent
Member States, is also an international actor in its own right. It has sought to increase and deepen
this particular role, and over time has created a network of relations throughout world which has
strengthened and increased its presence in the international arena. 28 The EU thus has a recognizable
and very real presence in various parts of the world where it seeks to pursue and promote its
interests. This is no less the case in relation to its immediate neighbourhood, particularly with
regards to those countries to its East. This was particularly necessary during the period at the end
of the Cold War, when the European Community/Union had to formulate a strategy to deal with
the new post-Communist states. With regards to the Central European countries that would later
go on to become European Union Members States, the Europe Agreements were created for this
purpose.29 These were association agreements which recognized the third country’s aspirations for
European Union membership and acted as the legal framework for those countries eventual

27
MARCIACQ, Florent – FLESSENKEMPER, Tobias (2018): The European Union and its Eastern Partners:
Beyond the Limits of Current Approaches to Regional Cooperation, Instituto Affari Internazionali, Documenti IAI
18, 2 March 2018, 4, http://oefz.at/wp-content/uploads/2017/11/iai1802.pdf (Accessed 2019.05.31)
28
CRAIG, Paul – DE BURCA, Grainne (2011): EU Law: Text, Cases, and Materials, Oxford, Fifth Edition, 303.
According to Article 21 of the Treaty on European Union, The European Union is to develop relationships and create
partnerships with third countries, as well as various international, regional and global organisations that share its
principles. Additionally, the EU is to define and pursue common policies and actions in the field of international
relations with the aims, inter alia, of defending its values and interests, as well as its security, independence and
integrity.
29
European Commission: Europe Agreement, https://ec.europa.eu/neighbourhood-
enlargement/policy/glossary/terms/europe-agreement_en, (Accessed 2018.02.02). Further analysis of the Europe
Agreements can be found in MARESCEAU, Marc - MONTAGUTI, Elisabetta: The relations between the European
Union and Central and Eastern Europe: a legal appraisal’, Common Market Law Review 32, 1995, pp. 1327–1367.

15
accession.30 In relation to the post-Soviet states it was recognized there was a need for a different,
innovative kind of “intermediate type of agreement”, which would go beyond the the Trade and
Cooperation Agreement which had been signed in 1989 between the European Community and
the Soviet Union with the aim of normalizing relations, 31 but which would lack the depth and
comprehensiveness of the Europe Agreements.32 This led to to the adoption of a resolution by the
Council of the European Union on October 5 1992 giving the European Commission the ability
to negotiate Partnership and Cooperation Agreements with the newly independent post-Soviet
states.33 However, despite the fact that these PCAs could be said to be less substantive in terms of
their aims as compared to the Europe Agreements, such agreements went beyond merely being
ordinary treaties,34 and deal with such areas as creating a framework for political dialogue,
encouraging democratic reform, the movement towards creating a market economy, economic
cooperation, and the strengthening of trade and investment ties.35 From the end of the 1990s, the
EU has signed ten such agreements with former Soviet republics. 36

1.2 The European Neighbourhood Policy (ENP)

In 2004 and 2007 the European Union experienced a great enlargement as a result of its integration
of a number of countries of the former Eastern Bloc. One of the consequences of this historical
event was that it brought a group of new neighbours to its borders with which it would have to
coexist and relate to in a very direct and immediate way. In this specific historic context it became

30
Ibid.
31
HILLION, Christophe (2006): Russian Federation (Including Kaliningrad). In BLOCKMANS, Steven –
LAZOWSKI, Adam eds.: The European Union and its Neighbours: A Legal Appraisal of the EU’s Policies of
Stabilisation, Partnership and Integration. The Hague, T.M.C Asser Press, 468.32 SCHNEIDER, Klaus (2001): The
Partnership and Cooperation Agreement (PCA) between Ukraine and the EU – Idea and Reality. In HOFFMAN, Lutz
– MÖLLERS, Felicitas eds.: Ukraine on the Road to Europe. Berlin and Heidelberg, Springer-Verlag, 2001, 66.
32
SCHNEIDER, Klaus (2001): The Partnership and Cooperation Agreement (PCA) between Ukraine and the EU –
Idea and Reality. In HOFFMAN, Lutz – MÖLLERS, Felicitas eds.: Ukraine on the Road to Europe. Berlin and
Heidelberg, Springer-Verlag, 2001, 66.
33
YUNUSOV, Khaydarali (2014): Partnership and Cooperation Agreements of the European Union with Central
Asian Countries, Studii Europene, 1, 2, https://www.ssoar.info/ssoar/bitstream/handle/document/41880/ssoar-
studeuropene-2014-1-yunusov-Partnership_and_Cooperation_Agreements_of.pdf?sequence=1 (Accessed
2017.11.15)
34
LIGHT, Margot, - ALLISON Roy (2006): The place of Europe in Russian foreign policy. In ALLISON, Roy,
LIGHT Margot, and WHITE, Stephen, Putin’s Russia and the Enlarged Europe, London, Chatham House, 2006, 6.
35
EUR-LEX: Partnership and Cooperation Agreements (PCAs): Russia, Eastern Europe, the Southern Caucasus and
Central Asia, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM%3Ar17002 (Accessed 2019.05.31)
36
These states include: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Ukraine,
Uzbekistan, and Tajikistan. See Ibid.

16
a necessity for the EU to formulate a strategy in order to deal with this new situation, which would
define its own interests in relation to its neighbours and the creation of very real and effective
mechanisms and tools in order to achieve its goals.The proposed answer to this problem was the
European Neighbourhood Policy (ENP), which was initiated as part of the EU’s quest to formulate
an identity for itself in light of the new environment and circumstances that it encountered as a
result of its expansion. The ENP was launched in 2004, having been based on a 2003 policy
document titled „Wider Europe – Neighbourhood: A New Framework for Relations with our
Eastern and Southern Neighbours”,37 laying down the fundamentals of that new field of EU
external relations.38 The document highlighted the importance of the then upcoming 2004
enlargement, which increased the EU’s interest in enhancing relations with the new neighbours,
namely Russia, the Western NIS, and the Southern Mediterranean. 39 Promoting stability,
prosperity and peace “within and beyond the new borders of the Union” was also set out as an
essential aim of the ENP.40 The document states that not only does the European Union have a
duty towards the citizens of its own Member States (in the context of the time, this included those
states who were then members and were on the verge of obtaining membership), but also a duty
towards its neighbours to safeguard social cohesion and dynamic economic development. 41 The
major incentives for the partner states of the ENP relate to both economic and political issues, and
indeed, it is explicitly stated that the European Union envisages an “enhanced interdependence –
both political and economic”.42 It is this interdependence that can lead to the promotion of
“stability, security, and sustainable development” both within the European Union and its
neighbouring countries. 43 The EU offers benefits and more preferential relations in particular
where there is progress made in the area of both economic and political reform. 44

37
Communication from the Commission (2003): Wider Europe – Neighbourhood: A New Framework for Relations
with our Eastern and Southern Neighbours, 11 March 2003, COM (2003), 3,
http://eeas.europa.eu/archives/docs/enp/pdf/pdf/com03_104_en.pdf, (Accessed 2018.02.02)
38
European Union External Action: European Neighbourhood Policy, 21 December 2016,
https://eeas.europa.eu/diplomatic-network/european-neighbourhood-policy-enp/330/european-neighbourhood-
policy-enp_en (Accessed 2019.02.19)
39
Communicaton from the Commission (2003): i.m., 3.
40
Ibid, As the ENP communiction states, “the EU should aim to develop a zone of prosperity and a friendly
neighbourhood – a ‘ring of friends’ with whom the EU enjoys close, peaceful and co-operative relations”.
41
Ibid, 3.
42
Ibid, 4.
43
Ibid.
44
Ibid, 9.

17
1.3 Economic and Political Dimensions of ENP

I. With regards to the economic dimension of the ENP, it aims to offer the partner countries the
prospect of a stake in the EU’s internal market and liberalisation to promote the free movement of
persons, goods, services and capital (four freedoms) also in the relations between the EU and these
third countries. 45 This is connected to the implementation of relevant aspects of the acquis
communautaire, in particular those which relate to the European Union’s internal market and its
regulatory structures.46 This involves the approximation to European Union standards and
regulations in this particular area.47 The opening up and liberalisation of trade is also considered
an aspect of the economic component of the ENP, it being key in this area.48

II. In relation to the political dimension of the the ENP, it seeks an intensification in political
relations between the European Union and neighbouring states.49 Values are central to the political
dimension of this cooperation between the EU and its neighbours, which is made clear from the
text of the Communication. Indeed, it states that “shared values and mutual understanding” act
as a foundation for the deepening of political relations between the two. 50 The document sets out
the necessary prerequisites for bringing about political stability in the region, which includes such
values and elements as “Democracy, pluralism, respect for human rights, civil liberties, the rule
of law, and core labour standards”.51 The Communication also envisages the creating of a political
framework which would help to institutionalise the rule of law. 52
The ENP, despite containing elements of the EU’s enlargement strategy (in particular the
export of the acquis communautaire and the use of polity conditionality), was essentially created
in order to act as an alternative to further EU enlargement. 53 The aim of the ENP did not include a
perspective of membership or a role in the Union’s institutions, and the issues posed by that

45
Ibid.
46
Ibid, 10.
47
Ibid.
48
Ibid.
49
Ibid, 9.
50
Ibid, 12.
51
Ibid, 7.
52
Ibid, 9.
53
WOLCZUK, Kataryna (2009): Implementation without Coordination: The Impact of EU Conditionality on Ukraine
under the European Neighbourhood Policy. Europe-Asia Studies, Vol. 61, No. 2, March 2009, 189-190,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2135703 (Accessed 2019.02.17)

18
dimension of EU–third countries cooperation should be seen as separate and distinct from the
question of EU accession.54 Essentially, by attempting to modernize the neighbouring states and
to make them stable, secure and prosperous, the EU attempts to induce changes in their behaviour
in line with its own aims, norms and preferences. 55 As well as being a major instrument in the
achievement of EU external relations goals, it also claims to be mutually beneficial for both itself
and neighbouring countries, as it allows the latter to „share the benefits of EU enlargement in
terms of stability, security and well-being”56 and to „participate in various EU activities”.57
Previously, the EU’s relationship with neighbouring states was seen through the prism of its
policies of enlargement and the pre-accession process. 58 However, with the enlargements of 2004
and 2007 the EU came at least close to reaching what some consider to be its limits, and
encountered states that may never actually be given an EU membership perspective. 59
The European Union has been conceived of as a “normative power”, in that its influence
in the international arena lies in the upholding and promotion of certain ideas and norms. 60 It is
this assumption that essentially lies behind the conception and formulation of the ENP.61
Furthermore, the ENP itself has also been characterised in terms of being an external governance
project which seeks to manage the neighbouring lands beyond its own borders, this concept having
been formulated in order to highlight the specific nature of the EU’s attempt to extend its influence
and governance outside of the boundaries of the EU, and is in particular a result of both the EU’s

54
Ibid,
55
LYUBASHENKO, Igor (2012): Sources of misunderstanding: Intervening variables influencing the effectiveness
of the European Neighbourhood Policy towards Eastern states. In STADMÜLLER, Elzbieta – BACHMANN, Klaus
eds.: The EU’s Shifting Borders: Theoretical approaches and policy implications in the new neighbourhood,
Routledge: London and New York, 83.
56
Communication from the Commission (2004): Policy: European Neighbourhood Strategy Paper, 12 May 2004,
COM (2004), 6, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52004DC0373&from=EN,
(Accessed 2017.10.08)
57
Ibid, 3.
58
GEBHARD, Carmen (2010): The ENP’s Strategic Conception and Design Overstretching the Enlargment Template.
In WHITMAN, Richard G. – WOLFF, Stefan eds.: The European Neighbourhood Policy in Perspective: Context,
Implementation and Impact, Hampshire, Palgrave Macmillan, 89.
59
Ibid.
60
MANNERS, Ian (2002): Normative Power Europe: A Contradition in Terms?,, Vol.40, No. 2, Copenhagen,
Copenhagen Peace Research institute, 21,
https://rucforsk.ruc.dk/ws/portalfiles/portal/38395695/Ian_Manners_Normative_Power_Europe_A_Contradiction_in
_Terms_COPRI_38_2000.pdf (Accessed 2019.02.15)
61
KAPITONENKO, Mykola (2015): Ukraine: The Need to Securitize the European Neighborhood Policy. In
INAYEH, Alina – FORBRIG, Joerg eds.: Reviewing the European Neighbourhood Policy: Eastern Perspectives,
Europe Policy Paper 4, The German Marshall Fund of the United States, Washington DC, 38,
www.gmfus.org/file/6400/download (Accessed 2019.02.15)

19
nature as an international actor as well as a sense of enlargement fatigue that arose after the the
joining of the new Member States in 2004 and 2007.62
An important and relevant point which must be mentioned here in relation to this topic is
Article 8 of the Treaty on European Union, which was introduced by the Treaty of Lisbon. This
article states in its first paragraph that the European Union is to „develop a special relationship
with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness,
founded on the values of the Union and characterised by close and peaceful relations based on
cooperation.” Furthermore, Article 8(2) gives the the Union power to “conclude specific
agreements with the countries concerned” and that „These agreements may contain reciprocal
rights and obligations as well as the possibility of undertaking activities jointly. Their
implementation shall be the subject of periodic consultation.”
Various scholars have pointed out several important features relating to Article 8, one of
which is that neighbouring countries are offered a special, privileged form of relations, showing
the importance of both political and geographical criteria. 63 Furthermore, it makes explicit the
conditionality approach which is intrinsic to the European Neighbourhood Policy. 64 In fact, it can
be argued that Article 8 actually acts as a constitutional foundation for the European Union to
export its norms. 65 Additionally, Article 8 appears to envisage a „new generation of agreements”
between the European Union and neighbouring partner countries. 66 Furthermore, it should also be
pointed out that it has been argued that Article 8 actually places an onus on the European Union
to pursue a „proactive policy” with regards to its neighbouring states, which involves aiding them
in transformation and state-building according to Article 21 of the Treaty on European Union. 67

62
CAMPAIN, Marie (2012): Avoiding new dividing lines? EU external governance and the Eastern neighbours. In
STADMÜLLER, Elzbieta – BACHMANN, Klaus eds.: The EU’s Shifting Borders: Theoretical approaches and
policy implications in the new neighbourhood, London and New York: Routledge, 120.
63
PETROV, Roman – VAN ELSUWEGE, Peter (2011): Article 8 TEU: Towards a New Generation of Agreements
with the Neighbouring Countries of the European Union?, European Law Review, 2011, Vol. 36, Issue October, 689,
https://www.researchgate.net/publication/255697657_Article_8_TEU_Towards_a_New_Generation_of_Agreement
s_with_the_Neighbouring_Countries_of_the_European_Union (Accessed 2019.02.13)
64
Ibid, 688.
65
In PETROV, Roman – VAN ELSUWEGE, Peter eds (2014): Setting the Scence: Legal approximation and
application of EU law in the Eastern neighbourhood of the European Union. In PETROV, Roman – VAN
ELSUWEGE, Peter: Legislative Approximation and Application of EU Law in the Eastern Neighbourhood of the
European Union: Towards a Common Regulatory Space?, London, Routledge, 1.
66
PETROV, Roman – VAN ELSUWEGE, Peter (2011): i.m., 692.
67
HILLION, Christophe (2014): Anatomy of EU norm export towards the neighbourhood: The impact of Article 8
TEU. In PETROV, Roman – VAN ELSUWEGE, Peter eds: Legislative Approximation and Application of EU Law
in the Eastern Neighbourhood of the European Union: Towards a Common Regulatory Space?, London, Routledge,
18.

20
The Treaty of Lisbon introduced this article and it outlines the principles that are to guide the
European Union’s external action68 in all the various areas of the European Union’s activity in the
international arena (It shall also be seen in the dissertation how Article 21 TEU was of importance
in the Court of Justice of the European Union’s argumentation and reasoning in relation to the
EU’s ability to place restrictive measures on Russia).69 It can be said that while Article 21 is not
limited to any specific region, Article 8 very specifically relates to its surrounding
neighbourhood,70 the latter article being in harmony and representing the interests and values of
the former.71

1.4 The Eastern Partnership

The Eastern Partnership was initiated in 2008 with a joint proposal made by Poland and Sweden
which stated that “There is a need to strengthen the European offer in the Eastern direction and

68
ASTERITI, Alessandra (2017): Article 21 TEU and the EU’s Common Commercial Policy: A Test of Coherence,
European Yearbook of International Economic Law 2017, 2,
https://www.researchgate.net/publication/320053351_Article_21_TEU_and_the_EU's_Common_Commercial_Polic
y_A_Test_of_Coherence (Accessed 2019.05.22). According to Article 21(2) of the Treaty on European Union: 2.
The Union shall define and pursue common policies and actions, and shall work for a high degree of cooperation in
all fields of international relations, in order to:(a) safeguard its values, fundamental interests, security,
independence and integrity; (b) consolidate and support democracy, the rule of law, human rights and the principles
of international law;(c) preserve peace, prevent conflicts and strengthen international security, in accordance with
the purposes and principles of the United Nations Charter, with the principles of the Helsinki Final Act and with the
aims of the Charter of Paris, including those relating to external borders;(d) foster the sustainable economic, social
and environmental development of developing countries, with the primary aim of eradicating poverty;(e) encourage
the integration of all countries into the world economy, including through the progressive abolition of restrictions
on international trade;(f) help develop international measures to preserve and improve the quality of the
environment and the sustainable management of global natural resources, in order to ensure sustainable
development; (g) assist populations, countries and regions confronting natural or man-made disasters; and (h)
promote an international system based on stronger multilateral cooperation and good global governance.
69
See Section “4.4 The Court of Justice of the European Union and the European Union’s Restrictive Measures
Regime”.
70
LONARDO, Luigi (2018): Common Foreign and Security Policy and the EU’s external action objectives: an
analysis of Article 21 of the Treaty on European Union, European Constitutional Law Review 14, 594,
https://www.cambridge.org/core/services/aop-cambridge
core/content/view/83739CB14F35784B56A2D67094863E75/S1574019618000329a.pdf/common_foreign_and_secu
rity_policy_and_the_eus_external_action_objectives_an_analysis_of_article_21_of_the_treaty_on_the_european_u
nion.pdf (Accessed 2019.05.22)
71
HILLION, Christophe (2013): The EU Neighbourhood Competence Under Article 8 TEU, Jacques Delors
Institute, Policy Paper 69, 19 February 2013, 5,
https://institutdelors.eu/wpcontent/uploads/2018/01/euneighbourhoodart8teu-hillion-ne-jdi-feb13.pdf (Accessed
2019.05.22)

21
to develop an Eastern Partnership.”72 The proposal went on to say that this partnership should be
based upon the ENP but at the same time it should also go beyond it, agreeing with the principle
of differentiation in relation to neighbours contained in the ENP, and at the same time enforcing
the horizontal connections between the European Union and these particular neighbours. 73 The
proposal stated that that the co-operation is to involve the following countries included in the ENP,
that is Ukraine, Moldova, Azerbaijan, Armenia, Georgia and Belarus, and that certain projects
could even be extended to the Russian Federation. 74
Subsequently, the Eastern Partnership was then officially launched on the initiative of the
European Union External Action Service in order to act as a framework for the European Union’s
relations with such post-Soviet states as Armenia, Azerbaijan, Belarus, Georgia, Moldova, and
Ukraine. It was stated in 2008 that “The European Council welcomes the proposals for developing
the eastern dimension of the European Neighbourhood Policy”, thus acknowledging that the
Eastern Partnership is a particular sub-branch of the ENP created in order to specifically deal with
states to its East.75 The creation of this intiative within the framework of the ENP also acted as a
way of acknowledging the “Europeanness” of the countries involved in this program, in contrast
to the states of the Southern Mediterranean.76
The European Commission was invited by the European Council of June 2008 to put
forward a proposal for an Eastern Partnership with the abovementioned states, which led to the
December 2008 Communication from the Commission to the European Parliament and the
Council relating to the Eastern Partnership. 77 According to this the Eastern Partnership intiative
aims to express solidarity on the part of the European Union towards the partner countries, and to

72
EU Neighbours (2008): Polish-Swedish Proposal: Eastern Partnership, June 2008,
http://www.euneighbours.eu/library/sites/default/files/attachments/Polish-Swedish%20Proposal.pdf, (Accessed
2017.10.08)
73
Ibid. It should also be noted that another element of the European Neighbourhood Policy is the Union for the
Mediterranean (known before 2008 as the Euro-Mediterranean Partnership), which involves the European Union
attempting to deepen its relations Southern partners. See European Commission: European Neighbourhood countries,
https://ec.europa.eu/culture/policy/international-cooperation/neighbourhood_en (Accessed 2019.02.05)
74
Ibid.
75
Brussels European Council Conclusions, 19-20 June 2008, 68, 11018/1/08 REV 1, COCL 2,
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/101346.pdf, 19, (Accessed 2017.10.08)
76
GHAZARYAN, Nariné (2012): The Evolution of the European Neighbourhood Policy and the Consistent
Evolvement of its Inconsistencies, Review of European and Russian Affairs 7(1), 11. However, it is also to be noted
that the EaP’s official documents avoid focusing on the European nature of the EU’s Eastern partners, see
GHAZARYAN, Ibid, , 9.
77
European Commission (2011): Join Staff Working Paper: Implementation of the European Neighbourhood Policy
in 2010 Report: Eastern Partnership, COM (2011) 303, Brussels, 25/05/2011, 2,
http://www.mfa.gov.md/img/docs/progress-report-EaP-2010.pdf, (Accessed 2019.02.07)

22
provide support for these countries to reform in a democratic and market-orientated manner, and
to affirm their statehood and the territorial integrity of those countries. 78 It is claimed that such an
approach helps to create conditions of “stability, security and prosperity” for the European Union,
its partner countries, and the whole European continent.79 It also worth nothing that it states that
the European Union’s strategic partnership with the Russian Federation shall continue “in
parallel” with the Eastern Partnership.”80 More explicitly, the sorts of values that the Eastern
Partnership seeks to promote are such principles as good governance, rule of law, market economy,
respect for minorities and human rights, and sustainable development. 81 The European Union’s
relationship to the Eastern Partner states and “the level of ambition” involved in this relationship
will relate to what extent these values will be practised and implemented in these partner states. 82

1.5 Instruments of the European Neighbourhood Policy and the Eastern Partnership

1.5.1 Action plans

The central instrument for the implementation and realisation of the goals of the ENP are Action
Plans, which function as road maps and guides, seeking to build upon and compliment the legal
agreements already in existence between the EU and partner states, particularly Partnership and
Cooperation Agreements (PCA) and Association Agreements (AAs). 83 The APs cover such areas
as „political dialogue and reform; trade and measures preparing partners for gradually obtaining
a stake in the EU’s internal market; justice and home affairs; energy, transport, information
society, environment and research and innovation; and social policy and people-to-people
contacts”.84 So far 12 such agreements have be drawn up between the EU and ENP partner states.85

78
Communication from the Commission to the European Parliament and the Council (2008): Eastern Partnership
COM(2008) 823 final {SEC(2008) 2974}, https://eur-lex.europa.eu/legal-
content/en/ALL/?uri=CELEX%3A52008DC0823, (Accessed 2017.10.08)
79
Ibid.
80
Ibid.
81
Ibid.
82
Ibid.
83
The European Parliamen (2017)t: The European Neighbourhood Policy, Fact Sheets on the European Union – 2017,
2, http://www.europarl.europa.eu/RegData/etudes/fiches_techniques/2013/060504/04A_FT(2013)060504_EN.pdf
(Accessed 2019.02.12)
84
Communication from the Commission (2004): Policy: European Neighbourhood Strategy Paper, 12 May 2004,
COM (2004), 6, http://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:52004DC0373&from=EN
(Accessed 2019.02.12)
85
“European Parliament (2017): The European Neighbourhood Policy, i.m., 2.

23
It must be mentioned that the ENP’s APs are not actually legally binding and the participants have
no obligation to fulfill the contents of the agreement.86 The ENP has been considered to be vague
with regards to the principle of conditionality and that it is in fact „conditionality-lite”.87 It holds
the principle of “more for more”, meaning that the EU will develop stronger ties with states that
achieve greater progress in the area of democratic reforms. 88 Furthmore, the AP process may be
considered to be a less hierarchical model of EU interaction with its neighbours, due to the fact
that both the setting of priorities and the monitoring of reforms are done jointly. 89 Though partner
countries are not able to determine the regulatory rules of the EU, they have a flexbility to
„negotiate the import of a sub-set of those rules only”.90 Not all APs are identical, and are created
in such a way as to suit the specific circumstances the EU’s neighbouring countries. 91

1.5.2 Association Agreements92

The launching of the Eastern Partnership foresaw establishing “New contractual relations”
between the European Union and the third country participants of the Eastern Partnership,
particularly in the form of Association Agreements.93 Any new contractual framework which
would go beyond a Partnership and Cooperation Agreement would be with countries with the
willingness and ability to undertake commitments of a far-reaching nature with the European
Union.94 This new contractual framework aimed to bring about strong political links between the

86
NOUTCHEVA, Gergana – EMERSON (2007): Economic and social development. In WEBER, Katja – SMITH,
Michael E. – BAUN, Michael eds: Governing Europe’s Neighbourhood: Partners or periphery? Manchester
University Press: Manchester, 93.
87
SASSE Gwendolyn (2010):,The ENP and the EU’s Eastern Neighbours: Ukraine and Moldova as Test Cases”. In
WHITMAN, Richard G. – WOLFF, Stefan Wolff eds.: The European Neighbourhood Policy in Perspective: Context,
Implementation and Impact, Palgrave Macmillan, Basingstoke, 2010, 181.
88
The European Parliament: The European Neighbourhood Policy, Fact Sheets on the European Union – 2016, 1.
89
NOUTCHEVA (2007): i.m.
90
SASSE, i.m., 181.
91
PETROV, Roman (2014): Relationship Between the EU and Ukraine. In SISKOVA, Nadezda ed: From Eastern
Partnership to the Association: A Legal and Political Analysis, Cambridge, Cambridge Scholars Publishing, 90.
92
It is not the author’s wish to focus on issues of financing within the overral framework of the European
Neighbourhood Policy, however, the author refers the reader to the following in relation to this issue: Regulation (EU)
No 232/2014 of the European Parliament and of the Council of 11 March 2014 establishing a European
Neighbourhood Instrument, https://eeas.europa.eu/sites/eeas/files/european_neighbourhood_instrument_en.pdf,
(Accessed 2019.02.12)
93
Communication from the Commission to the European Parliament and the Council (2008): Eastern Partnership
COM (2008) 823 final {SEC(2008) 2974}, Paragraph 31, https://eur-lex.europa.eu/legal-
content/en/ALL/?uri=CELEX%3A52008DC0823, (Accessed 2017.10.08)
94
Ibid.

24
country and the European Union, with the former seeking to establish “a closer link” with the
standards and legislation of the latter.95
As to the European Union’s legal power to conclude Association Agreements with third
countries, according to Article 217 of the Treaty on the Functioning of the European Union, the
European Union may establish Association Agreements which involves reciprocal rights, special
procedure and common action with third countries or with international organisations. Article 218
articulates the negotiation and conclusion procedure for such agreements. According to Article
218(2), the Council is to authorise the commencement of negotiations, shall adopt negotiating
directives, shall provide authorisation for the signing of such agreements and their conclusion.
Article 218(4) goes on to say that with regards to the negotiating process, the Council is able to
address directives to negotiator involved, and to appoint a committee who is to be consulted in the
course of the negotiations. After a proposal from the negotiator, the Council is to make a decision
that authorizes the agreement’s signing and even that it may apply provisionally before coming
into force.96 Likewise, as a result of a proposal from the negotiator, will make a decision leading
to the conclusion of the agreement.97 In the case of association agreements, the decision in relation
to the conclusion of the agreement shall occur after obtaining the European Parliament’s consent. 98
In case of urgency, both the European Council and Parliament may agree on a time-limit with
relation to consent.99 Throughout the entire procedure, the European Council is to act by qualified
majority. 100
It should be stated here that the Eastern Partnership also includes other initiatives within
its broader framework which are not the subject of this dissertation. One notable example is the 20
deliverables for 2020, which is focused on delivering and demonstrating various benefits to
citizens in the region in four main areas of priority. 101 These deliverables relate to such areas as
increasing both economic development and market opportunities; strengthening governance with
a focus on improving institutions; greater connectivity and environmental focus; and the increase

95
Ibid.
96
Article 218(5).
97
Aritlce 218(6).
98
Article 218(6)(a)(i)
99
Article 218(6)(a)(v)
100
Article 218(8)
101
EaP/Eastern Partnership: 20 Deliverables for 2020: Bringing tangible results for citizens,
https://eeas.europa.eu/sites/eeas/files/20_deliverables_for_2020.pdf (Accessed 2019.05.22)

25
of mobility and the strengthening of people-to-people contacts.102 This has included the funding
of various projects relating to the above-listed areas.103

102
Ibid.
103
Ibid.

26
 CHAPTER 2

THE LEGAL FRAMEWORK OF EUROPEAN UNION-RUSSIA RELATIONS

With the end of the Soviet Union a new political reality came into being on the European continent.
Old ideological conflicts and divisions seemingly came to an end and suddenly the European
Community faced states on its borders which were no longer to be seen as hostile forces and
security threats, but rather as partners. One such country was the Russian Federation, which is now
the European Union’s largest neighbour. As a result, with the end of the Cold War and the breakup
of the Soviet Union and the coming into being of the Russian Federation, it became imperative to
place the relationship between the two on new legal and political foundations. The relations
between the European Union and Russia have been described as being based “three legal
layers”, 104 all three of which shall be examined here. The first layer is the Partnership and
Cooperation Agreement (PCA) signed between the two and certain other bilateral agreements, the
second are the ‘road maps’ aiming to create the four “Common Spaces” between the EU and
Russia, and the third relates to legislation dealing with EU-Russian sectoral cooperation,105 the one
of relevance for this dissertation relating to the energy sector.

2.1 The European Union-Russia Partnership and Cooperation Agreement

During most of the Cold War period, the European Community was viewed in a somewhat hostile
and sceptical way by the Soviet Union, due to it having been seen as a vital part of the broader
Western alliance.106 The European Community, unlike other international actors or even its own
Member States, had no official relationship with the Soviet Union until it signed a declaration with
COMECON in June 1988, which was followed in August of the same year by their mutual

104
KALINICHENKO, Paul (2014): Legislative approximation and application of EU law in Russia. In VAN
ELSUWEGE, Peter - PETROV, Roman eds.: Legislative Approximation and Application of EU Law in the Eastern
Neighbourhood of the European Union: Towards a Common Regulatory Space?, London and New York, Routledge,
247.
105
Ibid. These sectoral agreements relate to such areas as political dialogue, the prevention of illegal activities, energy,
environment, transport, science, technology, and education. However, there has been a suspension of certain dialogues
and consultations after the events in Crimea in 2014. See European Union External Action (2017): The European
Union and the Russian Federation, 21 November 2017, https://eeas.europa.eu/headquarters/headquarters-
homepage/35939/european-union-and-russian-federation_en (Accessed 2019.02.15)
106
WEBER, Mark (2000): Russia and Europe: Conflict or Cooperation. London, Macmillan, 68.

27
recognition.107 Mikhail Gorbachev’s concept of a “common European home” contributed to the
bringing about of negotiations between the European Community and the Soviet Union, which
later culminated in the signing of the already mentioned Trade and Cooperation Agreement (TCA)
in 1989. 108
The early 1990s can be seen as a time of rapprochement between Russia and the Euro-
Atlantic community. For a short period of time, it seemed that Russia adopted the European
Union’s “integration-through-transformation” view with regards to their relations, based on
Western-style reform. 109 It was expected that the new post-Soviet Russia had the same interests as
the West, and that the two would work together in the “new world order” at the end of the Cold
War. 110 It is the general belief that this was also due to the Russian Federation’s relative weakness
on the global scene after the dissolution of the Soviet Union, as compared to the ascendant position
of the Euro-Atlantic community at the time. 111 It was in this context that the European Union-
Russia Partnership and Cooperation Agreement was signed in 1994, however its ratification was
delayed in response to the first war that took place in Chechnya, and as a result it was only on 1
December 1997 that the agreement came into force.112 The Russian PCA had been envisaged as a
template for the other PCAs as well, and is considered to have been the most advanced amongst
that set of agreements.113 The PCA envisages the fostering of deeper political relations,
encouraging trade and investment, even to the point of establishing a free trade area between the
two in the future, and supporting reforms within the Russian Federation. 114
The Preamble of the PCA emphasises the historical connections between the European
Community and Russia, as well as shared common values, and that the two wish to strengthen and
develop relations between the two, and recognises the Trade and Cooperation Agreement between

107
DELCOUR, Laure (2011): Shaping the Post-Soviet Space? EU Policies and Approaches to Region-building.
Surrey, Ashgate, 24, 25.
108
WEBER (2000): i.m. 68.
109
GERRITS, André (2008): The European Union and the Russian Federation: Dealing with the ‘Grand Other’. In
GERRITS, André ed.: The European Union and Russia: Perception and Interest in the Shaping of Relations,
Netherlands Institute of International Relations Clingendael, The Hague, Clingendael European Papers No. 4, 11,
https://www.clingendael.org/sites/default/files/pdfs/20081101_paper_gerrits_eu_russia.pdf (Accessed 2019.02.15)
110
BARANOVSKY, Vladimir (2000): Russia: part of Europe or apart from Europe. International Affairs 76, 3, 447.
111
GERRITS (2008): i.m. 11.
112
LIGHT, Margot – LÖWENHARDT, John – WHITE, Stephen (2003): Russia and the Dual Expansion of Europe.
In GORODETSKY, Gabriel ed.: Russia Between East and West: Russian Foreign Policy on the Threshold of the
Twenty-First Century. London and Portland, Frank Cass, 62.
113
KALINICHENKO (2014): i.m. 247.
114
LIGHT, Margot, - ALLISON Roy (2006): i.m., 6.

28
the European Economic Community and the Soviet Union of 1989 as being a foundation of the
development of such cooperation. 115 Thus, the PCA explicitly acknowledges that Russia and the
European Community share a common past and values, and that the abovementioned TCA acts as
a foundation for the signing of the PCA. The statement of the Preamble also reveals by its
mentioning of “historical links” and “common values” that the role of identity and self-
understanding plays a role in this connection. Important values mentioned in the PCA’s Preamble
include the rule law, respect for human rights, in particular those relating to minorities, free
democratic elections with a multiparty system, and the creation of a market economy through
liberal economic policies.
In practice the PCA deals mainly with issues of an economic and technical nature, such as
Russia being granted most-favoured-nation treatment (Article 5) and the two major aims of the
Agreement being Russia’s being granted membership of the World Trade Organisation in the
future (Article 4) and the establishment of a free trade area (Article 3). 116 The concept of most-
favoured-nation status is a term rooted in the World Trade Organization, with this term meaning
that countries cannot normally discriminate between their various trading partners, which means
that if a special favour is granted to one state, so it must be done for all WTO member states.117
The utilization here of the WTO’s most-favoured-nation concept here anticipated the application
of the organization’s rules and norms, aiming to support both Russia’s transition in the political
and economic spheres. 118
The Preamble recognizes “the utility of the Agreement in favouring a gradual
rapprochement between Russia and a wider area of cooperation in Europe and neighbouring
regions and Russia's progressive integration into the open international trading system”.
According to Article 1 of the PCA, the objectives of the partnership created via the Agreement are

115
Agreement on partnership and cooperation establishing a partnership between the European Communities and their
Member States, of one part, and the Russian Federation, of the other part, 21997A1128(01), Official Journal L 327,
28/11/1997 P. 0003 – 0069, (Accessed 2018.01.20)
116
HAUKKLA, Hiski (2000): The Making of the European Union’s Common Strategy on Russia, Upi Working
Papers 28, 7, http://www.bits.de/EURA/wp28.pdf, (Accessed 2018.02.02)
117
World Trade Organization: Principles of the Trading System,
https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm (Accessed 2018.11.08)
118
VAN ELSUWEGE, Peter (2012): Towards a Modernisation of EU-Russia Legal Relations, EU-Russia Paper, June
2012, University of Tartu, Centre for EU-Russia Studies, 4, http://ceurus.ut.ee/wp-content/uploads/2011/06/EU-
Russia-Paper-51.pdf (Accessed 2018.09.16) A free trade area can be defined as two or more countries abolishing
tariffs between themselves, see LAW, Jonathan ed. (2008): Dictionary of Finance and Banking, Fourth Edition,
Oxford, Oxford University Press, 2008, 185.

29
the creation of a framework for political dialogue leading to closer relations; the promotion of
trade and investment, and the development of economic relations linked to the market economy
model; the strengthening of both political and economic freedoms; supporting the consolidation of
Russia’s democracy; cooperation in the areas of economy, society, finance and culture with the
aim of attaining a mutual advantage, responsibility and support; the bringing about of a framework
for Russia to integrate into a larger European cooperation area; bringing about the conditions to
establish a free trade area between the Community and Russia.
As can be seen from the above text, the aim was not the actual creation of a deeply
integrated political and economic area between the European Union and the Russian Federation,
and in relation to the establishment of the free trade area, it is rather a declaration of an intention
lacking real and substantive consequences, with Article 3 specifically stating that the signatories
considering “whether circumstances allow the beginning of negotiations on the establishment of a
free trade area”.119
As to Russia’s needing to approximate to the European Union’s standards and norms,
according to Article 55(1), “The Parties recognize that an important condition for strengthening
the economic links between Russia and the Community is the approximation of legislation. Russia
shall endeavour to ensure that its legislation will be gradually made compatible with that of the
Community”. Article 55(2) states that this approximation is to extend to: company law, banking
law, company accounts and taxes, protection of workers at the workplace, financial services, rules
on competition, public procurement, protection of health and life of humans, animals and plants,
the environment, consumer protection, indirect taxation, customs law, technical rules and
standards, nuclear laws and regulations, transport. Here, crucially, approximation cannot be
considered as a kind of formal legal commitment, but rather contains a vagueness allowing for a
flexibility with regards to obligations and time-scale, with there being no specific need to attain
specific results or the threat of some kind of sanction in the case that approximation objectives are
not achieved. 120
The PCA also establishes a political dialogue, which, according to Article 6, is to
compliment and enforce rapproachement between the EU and Russian Federation, give support to
the various political and economic changes that Russia is undergoing, and to make a contribution

119
VAN ELSUWEGE (2012): i.m., 5.
120
Ibid, 5-6.

30
in establishing various new types of cooperation. 121 Due to the limitations in the PCA from a legal
perspective, this dialogue takes on a great significance, as it allows for a certain dynamism in the
relationship, aiding in an envisaged rapprochement at the time, which was a major impetus for
signing the PCA in the post-Cold War period.122 In fact, of all the PCAs signed by the European
Union with post-Soviet states, it is the one with Russia which makes provision for the deepest level
of political dialogue and institutional cooperation. 123 This includes meetings to take place twice a
year between the President of the Council of the European Union, the President of the European
Commission and the President of the Russian Federation, as well as ministerial level meetings and
dialogue taking place within the context of the Cooperation Council (established according to
Article 90 of the PCA) and other occasions. 124 In addition to this, the PCA makes provision for
biannual meetings of senior officials of the EU and Russia, the utilization of diplomatic channels,
expert meetings, as well as parliamentary level dialogue. 125 The Russia PCA has been described
as turning the EU-Russia relationship into a “continuous political process”,126 and certainly this
political dialogue aspect of the agreement certainly contributes to this.
It has been argued by certain Russian officials and commentators that the PCA was
produced at a time when Russia was in a position of weakness after the breakup of the Soviet
Union, and sought to upgrade the PCA even before 2007 due to what they see as subordinate role
of Russia within it.127 In 2007, the European Union and Russia were preparing to negotiate a new
agreement to replace, supplement or supersede the 1997 PCA, as by the end of 2007 that

121
Article 6 goes on to say that the political dialogue: -shall strengthen the links between Russia and the European
Union. The economic convergence achieved through this Agreement will lead to more intense political relations;
shall bring about an increasing convergence of positions on international issues of mutual concern thus increasing
security and stability; shall foresee that the Parties endeavour to cooperate on matters pertaining to the observance
of the principles of democracy and human rights, and hold consultations, if necessary, on matters related to their due
implementation.
122
HILLION (2006): i.m. 480, 481.
123
PETROVA, Irina (2016): EU-Russia relations in the Wider Europe: From strategic partner to major competitor?
In GSTÖHL, Sieglinde (ed.): The European Neighbourhood Policy in a Comparative Perspective: Models,
challenges, lessons, Oxon, Routledge, 149.
124
Article 7.1-2.
125
Artilce 8-9.
126
HAUKKLA (2000): i.m. 7.
127
MAROCCHI, Tania (2017): EU-Russia Relations: Towards an Increasingly Geopolitical Paradigm. Heinrich Böll
Stiftung,https://eu.boell.org/en/2017/07/03/eu-russia-relations-towards-increasingly-geopolitical-paradigm
(Accessed 2019.02.09)

31
agreement’s first ten-year period was set to expire.128 However, this has not yet occured, and the
1994 PCA remains the legal basis of European Union-Russia relations.

2.2 ‘Four common spaces’ – ENP and Common Strategy

2.2.1 Common Strategy on Russia

The next significant instrument in relation to the European Union-Russia relationship was the
Common Strategy of the European Union on Russia, which came into force in 1999.129 The
Common Strategy of the European Union on Russia states that a prosperous Russia, which is stable
and democractic, and strongly connected to a united Europe is necessary for any “lasting peace”
on the European continent and that the issues that it faces can only be solved through cooperation
between the European Union and the Russian Federation. 130 It recognises Russia as belonging to
the “European family”, seeking to engage it in friendship and cooperation, and also being based
on belonging to a common European heritage. 131
The Common Strategy also affirms that the Partnership and Cooperation Agreement signed
between them remains at the relationship’s core, which aims at Russia’s cooperation and
integration with Europe, and also reiterates its aims of creating a free trade area between Russia
and the European Community some time in the future.132 As to the principle objectives, it is stated
that they are Russia’s consolidating of democracy, rule of law and public institutions; Russia’s
integration into a common economic and social European space; cooperation aiming at bringing
about both in Europe and elsewhere stability and security; and cooperating to deal with the
European continent’s common challenges 133

128
GANZLE, Stefan (2008): The EU’s Policy toward Russia: Extending Governance Beyond Borders? In
DEBARDELEBEN, Joan ed.: The Boundaries of EU Enlargement: Finding a Place for Neighbours. New York,
Palgrave Macmillan, 53, 66.
129
Common Strategy of the European Union of 4 June 1999 on Russia, 1999/414/CFSP, 1,
http://trade.ec.europa.eu/doclib/docs/2003/november/tradoc_114137.pdf. (Accessed 2018.02.04) The adoption of the
Common Strategy on Russia must be seen in the broader context of the European Union’s Foreign and Security Policy,
According to Article J.3 of the Treaty of Amsterdam, “The European Council shall decide on common strategies to
be implemented by the Union in areas where the Member States have important interests in common. Common
strategies shall set out their objectives, duration and the means to be made available by the Union and the Member
States.”
130
Ibid, Part 1.
131
Ibid..
132
Ibid.
133
Ibid.

32
 In response to the adoption of the Common Strategy, the Russian side felt that the stated
aims of the Common Strategy turned them into an object of EU policy which aimed to integrate
Russia on some level into a broader EU dominated area, and subsequently responded to this
strategy with its own Medium-term Strategy.134 According to this, it affirms that any Russia-
European Union partnership should be grounded in treaty relations, with no mention of Russia’s
joining or having an association status with the European Union. 135 It also states and reiterates
Russia as a world power straddling two continents, and that it needs the ability to maintain its
independence in relation to its activities in international fora. 136 Thus, it states a preference for
partnership with the European Union which focuses upon creating a collective security system in
Europe based on the principle of equality, still retaining the objective of creating a free trade zone
between Russia and the European Union, in addition to increasing cooperation and confidence in
both the political and economic spheres.137 This very clearly states Russia’s desire to assert its own
independent course with regards to its relations with the European Union, and not as an object for
integration into the European Union, even on an associated level.

2.2.2 The European Union, Russia and the Four “Common Spaces”

In the initial communication from the European Union in relation to the issue of “Wider Europe”,
relations with Russia are mentioned in a fairly positive light, stating that in recent years there had
been a rapid development of the EU/Russia dialogue and cooperation in such areas as politics,
security, science, energy and the environment. 138 From this statement we see that Russia was
envisaged as being part of the neighbourhood policy that was being articulated. In the end Russia
decided not to be a part of the ENP,139 however in May 2003 at the St. Petersburg Summit the

134
European Union Center of North Carolina (2008): The EU-Russia Relationship: A Flawed Strategic Partnership,
EU Briefings, 2,
https://europe.unc.edu/files/2016/11/Brief_EU_Russia_Partnership_Flawed_Strategic_Partnership_2008.pdf
(Accessed 2019.02.26)
135
Russian Medium Term Strategy, Moscow State University – The Chair of the European Union Law,
http://eulaw.edu.ru/old/english/legislation/docum/rustr.htm (Accessed 2019.02.11)
136
Ibid.
137
Ibid.
138
European Commission (2003): Wider Europe, i.m. 5.
139
European Commission: European Neighbourhood Policy, https://ec.europa.eu/neighbourhood-
enlargement/neighbourhood/overview_en (Accessed 2019.02.10) However, Russia does take part in the ENP’s Cross-
Border Coperation activities.

33
European Union and Russia agreed to strengthen their cooperation by creating four common
spaces within the framework of the 1994 PCA. 140 Shortly before this summit, Russian President
Vladimir Putin had said that: “For us, Europe is a major trade and economic partner, and our
natural, most important partner, including in the political sphere. Russia is not located in on the
American continent, after all, but in Europe”.141 The memorandum on these common spaces states
that the European Union and Russia agree to reinforce their cooperation with the aim of bringing
about the creation of four common spaces, which are to exist within the framework of their
Partnership and Cooperation Agreement.142 These common spaces are to include issues of
economics and the environment; issues relating to freedom, security and justice; external security,
which includes by the areas of crisis management and non-proliferation; and education and
research, which includes cultural components.143 Importantly, in the statement on the
establishment of the four common spaces, there is no mention of Russia approximating to the
European Union’s norms and standards, and the road map for the establishment of the four
common spaces may be considered as a “soft law instrument”. 144
In relation to the concept of a common economic space, the statement on the common
spaces says that the EU and Russia seek to create the conditions allowing for an increase and
diversification of trade between them, and to create opportunities for investment via the pursuit of
economic integration and a convergence in regulatory regimes, liberalisation of markets, the
facilitation of trade and the development of infrastructure.145
With regards to the common space of freedom, security and justice, it is acknowledged that
both the EU and Russia have a common interest in strengthening their cooperation with regards to
justice and home affairs, and in dealing with such issues as organized crime, terrorism and illegal
cross border activities. On the part of the EU, cooperation in such areas is to balance such factors
as security, justice, freedom, and the common values which are the foundation of the EU/Russia
146
relationship.

140
EU/Russia: The four “common spaces”, 23 November 2004, MEMO/04/268, 1 europa.eu/rapid/press-
release_MEMO-04-268_en.pdf, (Accessed 2018.01.30)
141
DOV, Lynch (2004): Russia’s Strategic Partnership with Europe. The Washington Quarterly 27:2, 99,
https://www.iss.europa.eu/sites/default/files/EUISSFiles/analy077.pdf, (Accessed 2018.01.30)
142
EU/Russia: The four “common spaces”, i.m., 1.
143
Ibid.
144
KALINICHENKO (2014): i.m. 247.
145
EU/Russia: The four “common spaces”, i.m., 1.
146
Ibid.

34
 In relation to the common space of cooperation in the field of external security, the aim is
to increase cooperation between the EU and Russia in relation to issues of security and crisis
management, including such threats as terrorism, the issue of weapons of mass destruction
proliferation, regional conflicts, failed states and to strenghten cooperation in order to deal with
the problem of natural disasters, this cooperation to be based on the common values which can be
found in the Partnership and Cooperation Agreement.147
Furthermore, the statement in relation to this particular envisaged common space says that
the European Union wishes that the “geographical priority” of this specific space should be the
common EU-Russia neighbourhood, including such countries as Belarus, Moldova and Georgia,
as it believes that it is in the common EU-Russia interest to advocate for solutions to persisting
conflicts and to further the cause of stability and prosperity in the area. 148
The last common space mentioned in the document is the common space on research,
education and culture, which says this space aims to reinforce contacts between people and to aid
in increasing EU and Russian economic competitiveness. This would involve utilizing the EU and
Russia’s intellectual heritage and tradition to further economic development, with the involvement
of civil society, and would help in the intensification of exchanges and connections in relation to
education and culture, and best practice promotion.149
In conclusion, it can be said that Russia’s approach to its relations with the European Union
differs greatly from that of certain other post-Soviet states, such as Ukraine, which seek deeper
integration with the European Union. Despite that fact that Russian leaders have often affirmed
the European nature of Russia, and have even proposed the concept of a Greater Europe “from
Lisbon to Vladivostok”,150 this has not meant an attempt to join the European Union itself or even
becoming an associated state. Instead, Russia has envisaged deepening its relationship with the
European Union on a more horizontal basis, 151 or, as one commentator has put it, “Russia seeks to
engage the EU without joining it”.152 Indeed, there has been no membership perspective offered

147
Ibid, 2.
148
Ibid.
149
Ibid.
150
TRENIN, Dmitri (2015): From Greater Europe to Greater Asia? The Sino-Russian Entente, Carnegie Moscow
Center, 1, https://carnegieendowment.org/files/CP_Trenin_To_Asia_WEB_2015Eng.pdf (Accessed 2019.02.14)
151
Though it should be stated that during his presidency Boris Yeltsin once lamented that Russia was not a Member
State of the European Union. See MAASS, Anna-Sophie (2017): EU-Russia Relations, 1999-2015: From Courtship to
Confrontation. Oxon, Routledge.
152
DOV (2004): i.m. 107.

35
to Russia to join the European Union (though it must be added that the situation is the same for
those countries that have signed the comprehensive new generation Association Agreements with
the European Union and who have explicitly stated that full membership of the European Union
is their ultimate goal) and the country does not adhere to the principle of fully conforming itself to
EU standards and norms.153 Instead, it can be argued that EU-Russia relations are dominated by
certain key issues and bargaining without any truly comprehensive integration taking place. 154 As
has been seen the 1994 Partnership and Cooperation Agreement, which remains the core
agreement and framework in which their relations still operate, remains soft when it comes to any
kind of approximation obligations, and the opinion is held that this document was signed at a time
when Russia was in a position of geopolitical weakness. Russia’s response to the Common
Strategy affirmed this feeling that it did not seek a kind of full integration into the European Union
as well. The nature of the four common spaces further reinforces this tendency.

2.3 European Union-Russia Energy Relations

It cannot be denied that one of the most prominent elements of geopolitics is energy. This has a
major determining influence in the conduct of world diplomacy and relations between states in the
international arena. A country’s ability to competitively export sources of energy to foreign
countries undoubtedly gives it a certain influence in world affairs, while countries lacking such
resources naturally seek various ways to fulfill their energy needs. The Russian Federation is the
major supplier of natural gas to the Member States of the European Union, 155 and this fact has led
to a certain degree of interdependence between the two in this sector, in that Russia looks to the
European Union as a major export market for its natural gas, while the latter relies on Russia’s
relatively cheap supply of this commodity. Thus, it can be safely said that energy, particularly
natural gas, is one of the most important, if not the most important component of this particular
bilateral relationship. This has led to attempts and calls for some sort of regulation in this area, in
the sense of creating a legal framework in order to govern this particular sector of relationship.
Here there shall be an examination of various attempts and proposals with regards to this issue.

153
LIGHT – LÖWENHARDT – WHITE (2003): i.m. 66.
154
Ibid.
155
Eurostat (2017): Energy Production and Imports, June 2017, http://ec.europa.eu/eurostat/statistics-
explained/index.php/Energy_production_and_imports (Accessed 2018.11.10)

36
Furthermore, four specific pipeline projects, OPAL, South Stream, Turkish Stream and Nord
Stream 2, shall be surveyed as well as the legal issues that have arisen within the context of the
European Union’s regulatory framework with regards to energy. Lastly, there shall be a case study
in relation to Hungary-Russia energy relations, specifically in the area of nuclear power. A major
issue which has existed between the European Union and Russia in the area of energy is the
building of the abovementioned pipelines, as well as various other energy projects as well. The
essence of the problem has related to what extent this Russia-originating natural gas pipeline
projects conforming themselves to the European Union energy acquis. As shall be seen, in certain
cases it has been ruled by the European Union that in fact they have not conformed to these rules
and regulations, which, in the case of the South Stream pipeline, has led to its actual cancellation.

2.3.1 Legal framework

Energy is one of the most important aspects of relations between the European Union and Russia.
As has already been stated above, the general legal framework of European Union-Russia relations
is established by the 1994 Partnership and Cooperation Agreement, which also contains an article
dealing with matters relating to energy. 156 The inclusion of this provision in the Partnership and
Cooperation Agreement sought to improve energy relations between the European Union and
Russia and also sought the integration of the Russian energy market. 157 However, it cannot be

156
This is Article 65, which is entitled “Energy Partner and Cooperation Agreement”. It states that:
1. Cooperation shall take place within the principles of the market economy and the European Energy Charter, against
a background of the progressive integration of the energy markets in Europe.
2. The cooperation shall include among others the followings areas:
- improvement of the quality and security of energy supply, in an economic and environmentally
sound manner,
- formulation of energy policy,
- improvement in management and regulation of the energy sector in line with a market economy,
- the introduction of a range of institutional, legal, fiscal and other conditions necessary to encourage
increased energy trade and investment,
- promotion of energy saving and energy efficiency,
- modernization of energy infrastructure including interconnection of gas supply and electricity
networks,
- the environmental impact of energy production, supply and consumption, in order to prevent or
minimize the environmental damage resulting from these activities,
- improvement of energy technologies in supply and end use across the range of energy types,
- management and technical training in the energy sector.
157
WALOSZYK, Monica (2014): Law and Policy of the European Gas Market, Cheltenham and Northampton,
Edward Elgar, 76.

37
denied that this article is somewhat vague. 158 It had been speculated that any new Partnership and
Cooperation Agreement between the European Union would contain a chapter relating to the
subject of energy. 159 However, at the moment no substantive progress has been made in bringing
about such an agreement, and the prospects of this occurring in the near future seems unlikely due
to the present state of relations.
An important attempt in creating some sort of overarching legal framework for European
Union-Russia energy relations was the Energy Charter Treaty, which was seen as having the
potential to act as the basis of a framework regulating energy relations between the European
Union and Russia.160 This came into being with the purpose of promoting international cooperation
in the area of energy and entered into force on 16 April 1998. 161 More specifically, one of its aims
was to integrate the Western European and the former Soviet states energy sectors, which must be
seen in the context of the new relationship that arose with the end of the Cold War. 162 The Russian
Federation signed the European Energy Charter in 1991, which was followed by the signing of the
Energy Charter Treaty and the Energy Charter Protocol on Energy Efficiency and Related
Environmental Aspects.163 However, Russia applied the Energy Charter Treaty only provisionally,
and later in 2009 terminated this provisional application, and explicitly stated that it did not intend
to become a contracting party of the ECT.164 As a result of Russia’s withdrawal from the ECT, it
can be said that energy relations between the European and Russia are essentially regulated by
non-legally binding commitments and dialogues. 165 The most notable is the EU-Russia Energy

158
VAN ELSUWEGE (2012): i.m., 6.
159
KONOPLYANIK, Andrey (2009): A Common Russia-EU Energy Space: The New EU-Russia Partnership
Agreement, Acquis Communautaire and the Energy Charter, Journal of Energy & Natural Resources Law, Vol 27 No
2 2009, 258, https://sisu.ut.ee/sites/default/files/autumnschool2013/files/andrey_konoplyanik.pdf (Accessed
2018.09.18).
160
Ibid, 261.
161
Energy Charter Secretariat (2004): The Energy Charter Treaty and Related Documents - A Legal Framework for
International Energy Cooperation, http://www.ena.lt/pdfai/Treaty.pdf (Accessed 2018.09.16)
162
BELYI, Andrei V. (2009): A Russian Perspective on the Energy Charter Treaty (ARI), Real Instituto Elcano,
98/2009, https://www.files.ethz.ch/isn/146402/ARI98 2009_Belyi_Russian_Perspective_Energy_Charter_Treaty.pdf
(Accessed 2018.09.16)
163
MIRONOVA, Irina (2014):Russia and the Energy Charter Treaty, International Energy Charter, 7 August 2014,
https://energycharter.org/what-we-do/knowledge-centre/occasional-papers/russia-and-the-energy-charter-treaty/
(Accessed 2018.09.13)
164
Ibid.
165
GEORGIOU, Natasha A. - ROCCO, Andrea (2017): Energy Governance in EU-Russia Energy Relations: Paving
the Way Towards an Energy Union 2017, 01/2017, 3, http://epapers.bham.ac.uk/2944/1/IEL_Working_Paper_01-
2017.pdf (Accessed 2018.09.16)

38
Dialogue, which was launched on 30 October 2000.166 The motivation for this development was
the recognition of the mutual interdependence which exists between the European Union and
Russia in the area of energy. 167 Its primary aim was to strengthen the relationship between the two,
and to increase reliability, predictability and security in energy matters. 168 As to substantive
developments as a result of this dialogue, there was the creation of an early warning mechanism
for dealing with energy emergencies, and also an understanding was reached in order to prepare a
road map for European Union-Russia cooperation until the year 2050.169 However, as in the case
of the provision relating to energy in the Partnership and Cooperation Agreement, these may be
described as “soft law” mechanisms, and lack legally binding norms and framework.170 Later, in
May 2003, as has already been mentioned above, at the St. Petersburg Summit the European Union
and Russia agreed to strengthen their cooperation by creating four common spaces within the
framework of the 1994 PCA, with the memorandum on establishing these common spaces stating
that within the context of the common economic space, it was stated that “In this space, the EU
and Russia also intend to maintain the momentum of the existing energy dialogue”.171
In addition to these attempts to create a sort of common legal framework regulating energy
relations between the European Union and Russia, one possible hypothetical scenario which has
come up for discussion is that of the Russian Federation adopting the European Union’s acquis
communautaire in the area of energy. 172As has be seen in a general sense already, Russia has
resisted a particular model of relations which would involve it having to integrate with the EU in
the sense of having to completely adopt its standards and norms, differing in its attitude from that
of certain other post-Soviet states, such as Ukraine, which shall be seen in this dissertation, seeks
deeper integration with the European Union through approximating to the European Union’s
norms and standards, which includes the area of energy. It is thought unlikely that Russia, a major
exporter of gas, would accept a framework of energy relations with the European Union that would

166
European Commission / Directorate-General for Energy (2011): EU-Russia Energy Dialogue, 23,
https://ec.europa.eu/energy/sites/ener/files/documents/2011_eu-russia_energy_relations.pdf (Accessed 2018.09.16)
167
Ibid.
168
Ibid.
169
VAN ELSUWEGE (2012): i.m., 6.
170
Ibid.
171
EU/Russia (2004): The four “common spaces”, i.m. 1.
172
KONOPLYANIK (2009):, i.m. 261.

39
involve the reception of the latter’s energy acquis, but rather, would seek to remain outside the
European Union’s regulatory system. 173
Now there shall follow a survey of four specific pipeline projects which illustrate certain
aspects of European Union-Russia energy relations. As shall be seen, there are certain situations
where despite there being scepticism about them in various quarters of the European Union, certain
opposition is able to be overcome. In other situations, however, certain projects have either been
abandoned or continue to face impediments, making their long-term viability unsure.

2.3.2 OPAL Pipeline

Ukraine is one of the major transit corridors through which Russian natural gas is delivered to the
European Union. 174 The difficult nature of relations between Russia and Ukraine at certain times
has led to attempts by Russia to diversify the routes through which it transports its gas to various
parts of Europe, seeking alternatives to the Ukrainian transit route.175 Russia for some time had an
incentive to look for such alternative routes of supply, 176 with problems going back even to the
1990s, when the two countries had issues in relation to payment and diversion of gas to certain
European countries.177 In 2006 a dispute between the two in relation to a rise in gas prices led to a
halt in Russian supplies to Ukraine 178, which also led to a disruption in the supply of gas to other
European countries. 179 In January 2009 there arose a dispute in relation to gas prices and transit
fees, leading to Russia cutting its gas supplies to Ukraine, even with them completely coming to a

173
GEORGIOU – ROCCO (2017): i.m. 5.
174
PIRANI Simon - YAFIMAVA (2016): Russian Gas Transit Across Ukraine Post-2019 – pipeline scenarios, gas
flow consequences, and regulatory constraints, February 2016, The Oxford Institute for Energy Studies,
https://www.oxfordenergy.org/wpcms/wp-content/uploads/2016/02/Russian-Gas-Transit-Across-Ukraine-Post-
2019-NG-105.pdf (Accessed 2018.08.28)
175
South Stream Transport (2011): South Stream: Energising Europe, Presentation, Brussels, 25 May 2011, ,
http://www.gazprom.com/f/posts/85/290063/presentation.pdf (Accessed 2018.09.20)
176
FRANZA, Luca (2015): From South Stream to Turk Stream: Prospects for Rerouting Options and Flows of Russian
Gas to Parts of Europe and Turkey, Clingendael International Energy Programme, 2015, 12,
http://www.clingendaelenergy.com/inc/upload/files/CIEP_paper_2015-05_web_1.pdf (Accessed 2018.09.12)
177
STERN, Jonathan (2006): The Russian-Ukrainian gas crisis of January 2006, Oxford Institute for Energy Studies,
January 16 2006, 2, https://www.oxfordenergy.org/wpcms/wp-content/uploads/2011/01/Jan2006-
RussiaUkraineGasCrisis-JonathanStern.pdf (Accessed 2018.09.20).
178
BBC News (2006): Ukraine and Russia reach gas deal, 4 January 2006,
http://news.bbc.co.uk/2/hi/europe/4579648.stm, (Accessed 2018.09.27)
179
Ibid.

40
halt.180 Central and Eastern Europe experienced gas shortages for over two weeks due to this
particular dispute.181
One alternative to Ukraine for the transportation of Russian gas is the Ostsee-Pipeline-
Anbindungsleitung (OPAL) pipeline.182 This is a pipeline which is designed to transport natural
gas to the Czech Republic via Germany. 183 Specifically, it is the on-shore section of the Nord
Stream 1 pipeline, which transports gas from Russia via the Baltic Sea. 184 In 2007 a joint venture
company named Wingas, which is owned by Gazprom and Wintershall, applied to the German
regulator Bundes Netz Agentur (BNA) for a 100 percent exemption for the OPAL pipeline
according to Article 22 of Directive 2003/55/EC concerning common rules for the internal market
in natural gas.185 The article states that ‘major new gas infrastructures, i.e. interconnectors between
member states, LNG and storage facilities, may, upon request, be exempted from the provisions
on third party access (TPA) (Art. 18, 19, 20) and tariffs (Art. 25.2, 25.3, 25.4)’.186 Germany’s
energy regulator responded favorably to the application, ruling that the OPAL pipeline could
receive an exemption.187
This decision was initially challenged by the European Commission in 2009, which
decided that Gazprom could only use up to 50% of the OPAL pipeline’s capacity. 188 However,
later, in 2016, the Commission changed its position, allowing for a greater liberalization of the
pipeline’s access by third parties. 189 This would in effect allow Gazprom a greater share of the

180
BBC News (2009): Q & A: Russia-Ukraine gas row, 20 January 2009,
http://news.bbc.co.uk/2/hi/europe/7240462.stm, (Accessed 2018.09.27)
181
Ibid.
182
LOSKOT-STRACHOTA, Agata (2017): The Opal Pipeline: controversies about the rules for its use and the
question of supply security, OSW, 17 January 2017, https://www.osw.waw.pl/en/publikacje/osw-commentary/2017-
01-17/opal-pipeline-controversies-about-rules-its-use-and-question (Accessed 2018.11.19)
183
REUTERS (2009): Germany rules favourably on OPAL gas pipeline, 25 February 2009,
https://uk.reuters.com/article/germany-energy-pipeline/germany-rules-favourably-on-opal-gas-pipeline-
idUKLP84033820090225?sp=true (Accessed 2018.09.12)
184
Court of Justice of the European Union (2017): General Court of the European Union No 83/17 Luxembourg, 21
July 2017 Order of the President of the General Court in Cases T-849/16 R, T- 883/16 R and T-130/17 R PGNiG
Supply & Trading GmbH, Poland, and Polskie Górnictwo Naftowe i Gazownictwo S.A. v Commission, Press Release,
1,https://curia.europa.eu/jcms/upload/docs/application/pdf/2017-07/cp170083en.pdf (Accessed 2018.09.12)
185
STANIC, Ana (2016): EU-Russia Relations Through the Prism of EU Law, Global Energy Debates and the Eastern
Mediterranean, PRIO Cyprus Centre, November 2016, 35, http://www.ealaw.eu/static/pdf/EU-Russia-Relations.pdf
(Accessed 2018.09.15)
186
PIRANI – YAFIMAVA (2016): i.m., 3.
187
REUTERS (2009): i.m.
188
Order of the President of the General Court of 21 July 2017, Case T-849/16 R, EUR-Lex, https://eur-
lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:62016TO0849(02) (Accessed 2018.09.27)
189
Ibid.

41
pipeline’s use, specifically up to 80%, and possibly even up to 100%.190 Poland subsequently
challenged this 2016 decision, taking its case to the General Court of the European Union in order
to annul the European Commission’s decision with regards to this matter. 191 Poland was
particularly concerned as it felt that the pipeline would threaten its role as a gas transit country and
thus its influence on future issues relating to gas supply. 192 However, the General Court rejected
the case, upholding the Commission’s position. 193 In this case, then, the OPAL pipeline can be
seen as an attempt to give Russia certain exemptions from EU regulations in this particular area,
which, in this case, was successful.

2.3.3. South Stream

The major impetus behind the South Stream pipeline project was the desire to diversify its gas
supply routes and seek new stable transit areas in order to export its natural gas to other parts of
Europe.194 In 2007 a memorandum of understanding was signed between Gazprom and the Italian
Eni for the South Stream pipeline’s construction.195 The pipeline was to begin in the Russian
Krasnodar region, close to Anapa, and was to cross the Black Sea to Bulgaria, near Varna. 196 From
there it was to go on and transport gas to other countries in Southern and Central Europe, Hungary
included. 197

190
NORLEN, Anders (2017): The lifting of OPAL capacity restrictions leads to shifting gas flows on Nord Stream,
Energy Insights By McKinsey, September 2017, https://www.mckinseyenergyinsights.com/insights/the-lifting-of-
opal-capacity-restrictions-leads-to-shifting-gas-flows-on-nord-stream/ (Accessed 2018.09.27)
191
Court of Justice of the European Union (2017): Order of the President of the General Court in Cases T-849/16 R,
T- 883/16 R and T-130/17 R PGNiG Supply & Trading GmbH, Poland, and Polskie Górnictwo Naftowe i
Gazownictwo S.A. v Commission, i.m., 2.
192
CHEE, Foo Yun (2017): EU court rejects Polish bid to halt Opal pipeline deal, verdict in 2019, 21 July 2017,
Reuters, https://www.reuters.com/article/us-gazprom-europe-gas-court/eu-court-rejects-polish-bid-to-halt-opal-
pipeline-deal-verdict-in-2019-idUSKBN1A625Z (Accessed 2018.09.12)
193
Ibid.
194
South Stream Transport (2011): South Stream: Energising Europe, Presentation, Brussels, 25 May 2011, 2,
http://www.gazprom.com/f/posts/85/290063/presentation.pdf (Accessed 2018.01.15)
195
South Stream Transport: Fact Sheet (2013): The South Stream Offshore Pipeline, October 2013, 2, http://south-
stream-transport.com/.../pdf/.../ssttbv_fact-sheet-south-stream-offshore-pipeline_38_en_20121206_2%20(1).pdf
(Accessed 2018.01.15)
196
South Stream Transport: Bringing Natural Gas: The South Stream Offshore Pipeline to Bulgaria, 4,
https://www.south-stream-transport.com/media/documents/pdf/en/2013/11/ssttbv_bringing-natural-
gas_en_20131126.pdf (Accessed 2018.01.15)
197
VIHMA, Antto - TURKSEN, Umut (2016): The Geoeconomics of the South Stream Project, Columbia/SIPA
Journal of International Affairs, 1 January 2016, https://jia.sipa.columbia.edu/geoeconomics-south-stream-pipeline-
project (Accessed 2018.09.20) An intergovernmental agreement was signed between Hungary and Russia for the
construction of the pipeline on Hungarian territory and was granted the status of a “national significance project”. See

42
 However, in time the project came to face major opposition from the European
Commission. In June 2014 the Commission initiated an infringement procedure against Bulgaria
with regards to the South Stream pipeline, alleging that the IGA relating to South Stream was in
breach of the Third Energy Package,198 and that the tendering process for constructing the pipeline
on Bulgarian territory was incompatible with EU rules relating to public procurement. 199 On
December 4 2014 the European Commission said that the bilateral agreements for the South
Stream pipeline, breached European Union law. 200 Klaus-Dieter Borchardt, the director for energy
markets at the European Commission, said in the European Parliament that “The Commission has
looked into these intergovernmental agreements and came to the conclusion that none of the
agreements is in compliance with EU law”, and “That is the reason why we have told these states
that they are under the obligation, either coming from the EU treaties, or from the Energy
Community treaty that they have to ask for re-negotiation with Russia, to bring the

Gazprom (2013): Contract signed for South Stream design in Hungary, 12 December 2013,
http://www.gazprom.com/press/news/2013/december/article180286/ (Accessed 2019.04.07)
198
The European Union’s energy acquis is composed of several packages developed by the European Union’s
Commission over the last several decades which aimed at liberalization of the energy market, the latest addition to
the legislation relating to the European Union’s energy market is the Third Energy Package, which is composed of
two directives and three regulations (See BUCHAN, David (2015): Energy Policy: Sharp Challenges and Rising
Ambitions. In WALLACE, Helen, POLLACK, Mark A., and YOUNG, Alasdair R. (eds), Policy-Making in the
European Union, Seventh Edition, Oxford, Oxford University Press, 345 ;European Commission: Market
Legislation https://ec.europa.eu/energy/en/topics/markets-and-consumers/market-legislation) (Accessed 2018.09.17)
These include Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning
common rules for the internal market in electricity and repealing Directive 2003/54/EC, OJ L 211, 14.8.2009, p. 55–
93, https://eur-lex.europa.eu/legal-content/en/ALL/?uri=CELEX%3A32009L0072 (Accessed 2018.01.11)
; Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for
the internal market in natural gas and repealing Directive 2003/55/EC, OJ L 211, 14.8.2009, p. 94–136, https://eur-
lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32009L0073 (Accessed 2018.01.11) The regulations are
Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access
to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003, OJ L 211,
14.8.2009, p. 15–35 https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32009R0714 (Accessed
2018.01.11); Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 2009 on
conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005, OJ L
211, 14.8.2009, p. 36–54 https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32009R0715 (Accessed
2018.01.11); and Regulation (EC) No 713/2009 of the European Parliament and of the Council of 13 July 2009
establishing an Agency for the Cooperation of Energy Regulators (Text with EEA relevance), OJ L 211, 14.8.2009,
p. 1–14, https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32009R0713 (Accessed 2018.01.11) The
Third Energy Package basic aims at the improvement of the internal energy market’s functioning and the solving of
various structural problems, which involves unbundling the energy sector, which is the separation of energy generation
and supply from network operators. See European Commission: Market Legislation, i.m.
199
STANIC (2016): i.m. 33.
200
Euractiv (2013): South Stream bilateral deals breach EU law, Commission says, 4 December 2013,
http://www.euractiv.com/section/competition/news/south-stream-bilateral-deals-breach-eu-law-commission-says/
(Accessed 2018.01.11)

43
intergovernmental agreements in line with EU law.” 201 Borchardt stated that one of the major
problems relating to the South Stream pipeline was that in this situation Gazprom would be both
the producer and supplier gas, which would go against the Third Energy Package’s “unbundling”
rules, as in this case there would be simultaneous ownership of production capacity and the
transmission network.202 Additionally, he also mentioned that there needed to be assurance that
third parties would have non-discriminatory access to the pipeline, and that Gazprom did not have
the right to be the only shipper, and that issues relating to the tariff structure needed to be properly
addressed. 203
In response to these developments, Russia announced the cancellation of the project in
December 2014, with President Vladimir Putin stating that “If Europe does not want to carry out
(South Stream), then it will not be carried out”, which was later followed by Gazprom head Alexei
Miller saying that “The project is closed”, with the above proceedings being terminated after
President Putin announced the cancellation of the project.204
The demise of the South Stream project cannot be separated from the difficulties that arose
in relations between the European Union and Russia as a result of events that took place in Crimea
and East Ukraine in 2014. 205 This led to the essential freezing of relations with regards to gas
issues, where it even became very difficult to arrange meetings between Russia and the European
Union.206 The working group set up by the EU and Russia dealing with the South Stream pipeline
was suspended, and EU decision-making in relation to such issues relating to Russian gas as OPAL
and DG COMP was delayed.207 It is believed that this inability to reach compromise on regulatory
matters, within the broader context of events in Ukraine, led to the cancelling of the South Stream
project.208

201
Ibid.
202
Ibid.
203
Ibid.
204
BBC News (2014): Russia drops South Stream gas pipeline plan, 1 December 2014,
http://www.bbc.com/news/world-europe-30283571 (Accessed 2018.01.11)
205
The Moscow Times (2017): Russia Wants EU Guarantee to Continue with Turkish Stream Development, 3
November 2017, https://themoscowtimes.com/articles/russia-wants-eu-guarantees-to-continue-with-turkish-stream-
59472 (Accessed 2018.01.11)
206
STERN, Jonathan – PIRANI, Simon – YAFIMAVA, Katia (2015): Does the cancellation of South Stream signal
a fundamental reorientation of Russian gas export policy, The Oxford Institute for Energy Studies, January 2015, 5,
https://www.oxfordenergy.org/wpcms/wp-content/uploads/2015/01/Does-cancellation-of-South-Stream-signal-a-
fundamental-reorientation-of-Russian-gas-export-policy-GPC-5.pdf (Accessed 2018.01.20)
207
Ibid.
208
Ibid.

44
2.3.4 Nord Stream 2

Another prominent and current proposal for the transportation of Russian gas to the European
Union is the Nord Stream 2 pipeline. The original Nord Stream pipeline is a twin pipeline system
which goes through the Baltic Sea runs from Vyborg in the Russian Federation to Lubmin,
Germany. 209 The Nord Stream pipeline runs through the Exclusive Economic Zones of Russia,
Finland, Sweden, Denmark and Germany. 210 The pipeline system is 1,224 km long, and is the most
direct connection between Russia’s gas reserves and the European Union’s energy market.211 The
Nord Stream 2 pipeline is to follow the same route as the original Nord Stream Pipeline, in order
to bring natural gas from Russia to Germany. 212 It is to be over 1, 200 kilometers long. 213
Feasibility studies began in relation to the pipeline 2011, and permits from the respective
relevant national governments began to be issued in 2018. 214 In September of the same year the
first deep water pipes for Nord Stream 2 were laid in the Gulf of Finland. 215 Up until this time, the
pipeline’s construction was limited to the waters around the departure point near Saint Petersburg
and also the arrival point near Griefswald, Germany. 216 In November around 100 kilometers of gas
pipelines were completed on the territory of Germany as part of the Nord Stream 2 project.217
Finland, Sweden, Germany and Russia have given their approval for the construction of the

209
Nord Stream :The Pipeline, https://www.nord-stream.com/the-project/pipeline/ (Accessed 2018.09.13)
210
Ibid.
211
Ibid.
212
Clean Energy Wire: Gas pipeline Nord Stream 2 links Germany to Russia, but splits Europe, Factsheet, 16 August
2018, https://www.cleanenergywire.org/factsheets/gas-pipeline-nord-stream-2-links-germany-russia-splits-europe
(Accessed 2018.09.13)
213
Gazprom: Nord Stream 2, http://www.gazprom.com/projects/nord-stream2/ (Accessed 2018.09.13)
214
Nord Stream 2: Fact Sheet: The Nord Stream 2 Project, 1, https://www.nord-
stream2.com/media/documents/pdf/en/2018/07/factsheet-project-en.pdf (Accessed 2019.05.30)
215
KEATING, Dave (2018): Russia's Controversial Nord Stream 2 Pipeline May Now Be Unstoppable, 5 September
2018, Forbes, https://www.forbes.com/sites/davekeating/2018/09/05/as-of-today-russias-controversial-nord-stream-
2-pipeline-is-already-underwater/#2d91b59a1e1c (Accessed 2018.10.10)
216
Ibid.
217
Xinhua (2018): First 100 kilometers of Nord Stream 2 pipeline in Germany completed, 16 November 2018,
http://www.xinhuanet.com/english/2018-11/16/c_137612144.htm (Accessed 2018.11.19)

45
pipeline, but Denmark has still yet to do so.218 It has been hoped that it will be completed by the
end of this year.219
The pipeline has provoked strong reactions from various quarters, with a major argument
being that it will increase Europe’s dependence on Russian natural gas. 220 Ukraine is particularly
against the pipeline’s construction, believing that it would have a strongly adverse effect on the
country’s economy due to it threatening its status as a gas transit country, with the Ukrainian
Finance Ministry having made the statement that Nord Stream 2 could lead to a loss for the
Ukrainian economy of up to 2.5 to 3 percent of its GDP.221 The pipeline has also provoked
opposition from Poland and the Baltic States, who believe that it will strengthen Russian influence
in Europe.222 Furthermore, the ramifications of the Nord Stream 2 pipeline project go beyond
Europe. In particular, the United States of America has taken a very strong interest in the project,
expressing strong opposition to it, with President Donald Trump publicly criticizing Germany for
what he sees as the country’s dependence on Russian gas. 223
An important development in relation to the project was the European Commission’s
attempt to extend the European Union’s gas rules to import pipelines, 224 though the Commission
denied that this proposal was directed against Nord Stream 2.225 The European Commission has
stated that “Pipelines in the EU area must be built and operated in accordance with all applicable
legislation. Nord Stream 2 cannot happen in legal void or exclusively according to the law of a

218
SHALAL, Andrea (2019): Nord Stream 2 upbeat Denmark will approve gas pipeline proposal, Reuters, 25 March
2019, https://www.reuters.com/article/us-gazprom-nordstream-2-denmark/nord-stream-2-upbeat-denmark-will-
approve-gas-pipeline-proposal-idUSKCN1R61EM (Accessed 2019.05.31)
219
BRZOZOWSKI, Alexandra (2019): Denmark delays Nord Stream 2 approval, Euractiv, 28 March 2019,
https://www.euractiv.com/section/global-europe/news/denmark-delays-nord-stream-2-approval/ (Accessed
2019.05.31)
220
MELIKSETIAN, Vanand (2018): Can Nord Stream 2 Be Stopped?, OilPrice.com, 25 September 2018,
https://oilprice.com/Energy/Energy-General/Can-Nord-Stream-2-Be-Stopped.html (Accessed 2018.09.28)
221
Interfax-Ukraine (2018): Finance Ministry: Ukraine to lose 2.5-3 percent of GDP over Nord Stream 2, Kyiv Post,
26 September 2018, https://www.kyivpost.com/ukraine-politics/finance-ministry-ukraine-to-lose-2-5-3-percent-of-
gdp-over-nord-stream-2.html (Accessed 2018.09.28)
222
DAISS, Tim (2018): Nord Stream 2 Clears Another Hurdle, 16 August 2018,
Oilprice.com,https://oilprice.com/Energy/Natural-Gas/Nord-Stream-2-Clears-Another-Hurdle.html (Accessed
2018.09.16)
223
MCBRIDE, James (2018): Nord Stream 2: Is Germany ’Captive’ to Russian Energy?, Council on Foreign
Relations, https://www.cfr.org/article/nord-stream-2-germany-captive-russian-energy (Accessed 2018.09.09)
224
European Commission (2017): Press Release, Energy Union: Commission takes steps to extend common EU gas
rules to import pipelines, 8 November 2017, http://europa.eu/rapid/press-release_IP-17-4401_en.htm (Accessed
2018.09.27)
225
EurAsia Daily (2018): European Commission “attacks” Nord Streams: no bans, but more complications, 8
November 2018, https://eadaily.com/en/news/2017/11/08/european-commission-attacks-nord-streams-no-bans-but-
more-complications (Accessed 2018.09.27)

46
third country. If built, this pipeline would need a legal framework that takes into account the key
principles of EU energy market rules.”226 Furthermore, the Commission stated that these rules are
connected to the Third Energy Package, which “aims at maximizing competition between gas
companies, avoiding conflict of interests between infrastructure operators and shippers and
finally, to provide security of supply.”227 In response, the builders of Nord Stream 2 claim that the
European Union’s internal gas market laws apply only to pipelines which transport gas within the
internal market, and thus are not applicable to Nord Stream 2 pipeline, as it imports gas from
outside of the territory of the European Union. 228
However, the European Commission’s attempt was actually rebutted by the legal service
of the Council of the European Union, which expressed the opinion that the European Union does
not have the authority to apply its energy acquis to the offshore pipelines in the EEZ of Member
States.229 Furthermore, it stated that it may actually be in contradiction of United Nations law
relating to the seas.230
Despite this, on 15 April 2019 the Council adopted an amendment to the European Union’s
gas directive which stipulates that the European Union’s internal gas market rules are to apply to
pipelines both going to and coming from third countries. 231 This will mean that the European
Union’s energy regulations will apply to the Nord Stream 2 pipeline at the point that it enters into
the territorial waters of Germany. 232 In response to this development, the Swiss company Nord

226
European Commission (2017): Fact Sheet, Questions and Answers on the Commission proposal to amend the
Gas Directive (2009/73/EC), Brussels, 8 November 2017, http://europa.eu/rapid/press-release_MEMO-17-
4422_en.htm (Accessed 2018.09.17)
227
Ibid.
228
Nord Stream 2 (2016): Questions and Answers: Nord Stream 2 – A new natural gas pipeline through the Baltic
Sea, 15, https://www.nord-stream2.com/en/download/document/38/ (Accessed 2018.09.01)
229
GOTEV, Georgi (2018): EU Council removes Nord Stream 2 legal hurdles, Euractiv, 5 March 2018,
https://www.euractiv.com/section/energy/news/industry-council-remove-nord-stream-2-hurdles/ (Accessed
2018.09.27); Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning
common rules for the internal market in natural gas and repealing Directive 2003/55/EC - compatibility with
UNCLOS, https://www.eumonitor.eu/9353000/1/j9vvik7m1c3gyxp/vkmc8v3flkyl (Accessed 2018.08.31)
230
Reuters (2018): EU legal blow to bid to regulate Russia’s Nord Stream 2 pipeline, March 5 2018,
https://www.reuters.com/article/us-eu-gazprom-nordstream/eu-legal-blow-to-bid-to-regulate-russias-nord-stream-2-
pipeline-idUSKBN1GH28D (Accessed 2018.09.27).
231
European Council/Council of the European Union (2019): Council adopts gas directive amendment: EU rules
extended to to pipelines to and from third countries, Press Release, 15 April 2019,
https://www.consilium.europa.eu/en/press/press-releases/2019/04/15/council-adopts-gas-directive-amendment-eu-
rules-extended-to-pipelines-to-and-from-third-countries/ (Accessed 2019.05.30)
232
TALUS, Kim – HANCHER, Leigh (2019): Exploring the limits of the EU’s unbelievable behaviour on Nord
Stream 2, Euractiv, 29 May 2019, https://www.euractiv.com/section/energy/opinion/exploring-the-limits-of-eus-
unbelievable-behaviour-on-nord-stream-2/ (Accessed 2019.05.30)

47
Stream 2 AG owned by Gazprom, informed the European Union that it is considering the
possibility of bringing investment dispute proceedings against it within the framework of the
abovementioned Energy Charter Treaty, referring specifically to Article 26(1) of the Charter,
which makes provision for relevant parties to amicably reach a settlement. 233 A key issue is that
according to Article 49a of the amended directive pipelines can receive a derogation from the
relevant EU regulations so long as the pipeline was completed before the coming into force of the
amended directive.234 Nord Stream 2 AG has requested that pipeline be treated as having been
completed, though in a practical sense this has not occurred, though it claims that there has been a
full commitment of investment.235 If it does not receive such a derogation, it has stated that it will
consider this as a discriminatory act against it as an investor.236
This particular issue is also of interest in relation to the abovementioned proposals or
models for a general legal framework to be created with regards to EU-Russia energy relations. It
was already mentioned that one possible model is Russia’s adoption of the European Union’s
energy acquis. As has already been stated, such a model of energy relations does not conform to
Russia’s thinking on such matters, and in this case there is strong resistence to this specific move
by the Commission. 237 However, in this case we also see that the Council of the European Union’s
own legal service rejected the proposal that the European Union has the ability in this particular
situation to place its norms on this third country.

2.3.5 Turkish Stream

As a result of the cancellation of the construction of the South Stream pipeline, Russia proposed
Turkey as an alternative partner for the construction of a new pipeline which would bring its natural

233
Ibid.
234
Directive (EU) 2019/692 of the European Parliament and of the Council of 17 April 2019 amending Directive
2009/73/EC concerning common rules for the internal market in natural gas (Text with EEA relevance), Article 49a,
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32019L0692 (Accessed 2019.05.30)
235
HALL, Siobhan (2019): Nord Stream 2 invokes Energy Charter Treaty to challenge EU gas link rules, S & P
Global Platts, 24 April 2019, https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/042419-
nord-stream-2-invokes-energy-charter-treaty-to-challenge-eu-gas-link-rules (Accessed 2019.05.30)
236
BURBEZA, Zoya (2019): Nord Stream 2: implications of the EU gas, Energy Blog, 10 May 2019,
https://knect365.com/energy/article/1b4368d2-fe22-4276-b078-7bf17471193e/nord-stream-2-implications-of-the-
eu-gas-directive-amendment (Accessed 2019.05.31)
237
EurAsia Daily (2018): i.m.

48
gas to the Balkans and Central Europe.238 Turkey is one of the major recipients of Russian gas,
which it presently imports via the Blue Stream and Trans-Balkan pipelines. 239 On 1 December
2014 Gazprom and Botas Petroleum Pipeline signed a Memorandum of Understanding in Ankara
relating to the construction of an offshore gas pipeline from Russia to Turkey across the Black
Sea.240 The Turkish Stream pipeline will stretch over 900 kilometers from the Russkaya
compressor station close to Anapa in the Russian Krasnodar region across the Black Sea to the
European part Turkey,241 reaching Ipsala on the Turkish-Greek border via Lüleburgaz.242
However, after the experience of South Stream, Russia appears to be cautious when it
comes to assessing the realization of the project. Russian Foreign Minister Sergei Lavrov made
the statement that “The growing energy needs of Southern and South-Eastern Europe could be
met by the extension of the second branch of the Turkish Stream to EU territory. Many
governments of EU states have shown considerable interest in this. We are open to this, but
considering the unfortunate experience of the South Stream, we will start this work only after
receiving firm legal guarantees from Brussels.”243 The European Commission itself has yet to take
an official position with regards to the Turkish Stream pipeline extension into the territory of the
European Union, which would most likely come after specific plans and requests are put forward

238
KORSUNSKAYA Darya (2014): Putin drops South Stream gas pipeline to EU, courts Turkey, Reuters, 1
December 2014, https://www.reuters.com/article/us-russia-gas-gazprom-pipeline/putin-drops-south-stream-gas-
pipeline-to-eu-courts-turkey-idUSKCN0JF30A20141201 (Accessed 2018.01.20)
239
Gazprom: TurkStream, http://www.gazprom.com/about/production/projects/pipelines/built/turk-stream/
(Accessed 2018.01.20)
240
Gazprom (2014): New gas pipeline towards Turkey, 2 December 2014,
http://www.gazprom.com/press/news/2014/december/article208505/ (Accessed 2018.01.20)
241
Ibid.
242
Hürriyet Daily News (2015): Russian firms give Turkish Stream gas pipeline details, 2 June 2015,
http://www.hurriyetdailynews.com/russian-firm-gives-turkish-stream-gas-pipeline-details--83363(Accessed
2018.01.20) On July 5 2017 Hungary and Gazprom signed a deal in order to link the former with the Turkish Stream
pipeline. The end of 2019 has been set as the target for achieving this, and, according to Foreign Minister Szijjártó,
linking up with the Turkish Stream pipeline could allow Hungary to import 8 billion cubic meters of gas per year,
which is near to the total consumption of the country as a whole. See Euractiv (2017): Hungary joins Gazprom
pipeline, as Trump touts US LNG, 6 July 2017, https://www.euractiv.com/section/energy/news/hungary-joins-
gazprom-pipeline-as-trump-touts-us-lng/ (Accessed 2019.04.07)
243
The Ministry of Foreign Affairs of the Russian Federation (2017): Foreign Minister Sergey Lavrov’s remarks at a
meeting with members of the Association of European Businesses in Russia Moscow, October 31, 2017, 2085-31-10-
2017, http://www.mid.ru/en/diverse/-/asset_publisher/zwI2FuDbhJx9/content/vystuplenie-ministra-inostrannyh-del-
rossii-s-v-lavrova-na-vstrece-s-clenami-associacii-evropejskogo-biznesa-v-rossijskoj-federacii-moskva-31-oktabra-
?_101_INSTANCE_zwI2FuDbhJx9_redirect=http%3A%2F%2Fwww.mid.ru%2Fen%2Fdiverse%3Fp_p_id%3D10
1_INSTANCE_zwI2FuDbhJx9%26p_p_lifecycle%3D0%26p_p_state%3Dnormal%26p_p_mode%3Dview%26p_p
_col_id%3Dcolumn-1%26p_p_col_pos%3D2%26p_p_col_count%3D5 (Accessed 2018.01.20)

49
in this area. 244 However, some issues and concerns have already been raised. For example, it has
been noted that any plan to extend the Turkish Stream pipeline into the territory of the European
Union would mean that it would have to deal with EU regulations, including the Third Energy
Package.245 Furthermore, certain key figures in the EU Commission have expressed concerns.
Maros Sefcovic, a Vice-President of the European Commission and leader of the Energy Union
project has expressed doubts with regards to the pipeline’s expansion into EU territory, saying that
there are unresolved differences between the EU and Russia in relation to the Third Energy
Package, and he also questioned the viability of the project. 246 The EU Commissioner for
Competition, Margaret Vestager also left open the possibility of the issue of compliance with
relevant EU antitrust regulations in relation to Gazprom’s negotiations with European states
potentially connected to Turkish Stream, saying that “All companies that operate in the EU market
– no matter if European or not - have to play by EU rules.”247

***

It can be said, based on the above analysis, that despite the existence of various tensions and
differences, there have also been at times decisions and policies from key quarters of the European
Union that have in certain ways helped, to an extent, to maintain, in real practical terms, the close
nature of European Union-Russia energy relations, particularly with regards to natural gas. Some
critics even claim with regards to certain situations that this contradicts the EU’s official and public
support for Ukraine within the context of that country’s tensions with Russia. 248 However, in
relation to the possibility of actually agreeing to a general legal framework acceptable to both
parties which would govern their energy relations, the differing views as to what such a framework
might look like, and the complexities in reaching such an agreement in this field which is by its

244
Economics Gazette (2018): Europe and Russia continue to speak in different languages for natural gas supplies, 8
January 2018, http://www.economicsgazette.com/europe-russia-continue-speak-different-languages-natural-gas-
supplies.html (Accessed 2018.01.20)
245
GURBANOV, Ilgar (2017): Perspective for ‘Turkish Stream’ Project: Possible Scenarios and Challenges, Natural
Gas World, 21 January 2017, https://www.naturalgasworld.com/perspective-for-turkish-stream-project-possible-
scenarios-and-challenges-35401 (Accessed 2018.01.20)
246
Ibid.
247
Ibid.
248
RAPOZA Kenneth (2017): On Russian Gas Front, Germany Does Ukraine No Favors,
4 August 2017, Forbes, https://www.forbes.com/sites/kenrapoza/2017/08/04/on-russian-gas-front-germany-does-
ukraine-no-favors/#27190483326e (Accessed 2018.09.28)

50
very nature strongly connected to geopolitics, make this an extremely difficult task. Furthermore,
due to the tense and complex nature of relations between the European Union and Russia at the
moment, it appears even more unlikely that an all embracing legal framework regulating energy
relations will be brought into being in the near future.

2.4 Case Study: Hungary’s and Russia’s Energy Relations in Light of Obligations under
the EU Energy Acquis

Energy is one of the dominant and most vital issues facing the world today and it will only continue
to increase in importance in the years to come. This is no less true for the individual Member States
of the European Union. When discussing matters relating to the EU’s energy supply, one cannot
avoid the issue of its relationship to Russia, which is a key player in the energy sector of various
EU Member States. With regards to Hungary, this can particularly be seen in the area of nuclear
energy. In this chapter there shall be an attempt to survey the planned expansion of the Paks
Nuclear Power Plant, including its historical background and aims, with a particular focus on the
response of the European Commission in relation to the Paks II project’s compliance with
European Union law.

2.4.1 Paks II’s background249

Hungary and the then Russian Empire and later Soviet Union had been on opposing sides during
both World War I and World War II. At the end of the latter a communist political system was set

249
At this point it is useful to briefly review some of the key legislation relating to the possibility of European Union
Member States utilizing nuclear power. According to Article 1 of the Treaty establishing the European Atomic Energy
Community, “It shall be the task of the Community to contribute to the raising of the standard of living in the Member
States and to the development of relations with the other countries by creating the conditions necessary for the speedy
establishment and growth of nuclear industries.”249 Article 2(c) elaborates on this, stating that the Community shall
“facilitate investment and ensure, particularly by encouraging ventures on the part of undertakings, the establishment
of the basic installations necessary for the development of nuclear energy in the Community”. According to Article
41 of the Euratom Treaty, “Persons and undertakings engaged in the industrial activities listed in Annex II to this
Treaty shall communicate to the Commission investment projects relating to new installations and also to
replacements or conversions which fulfil the criteria as to type and size laid down by the Council on a proposal from
the Commission.” Additionally, Article 103 states that “Member States shall communicate to the Commission draft
agreements or contracts with a third State, an international organization or a national of a third State to the extent
that such agreements or contracts concern matters within the purview of this Treaty.” (Consolidated Version of the
Treaty Establishing the European Atomic Energy Community) 1
December2009,https://europa.eu/europeanunion/sites/europaeu/files/docs/body/consolidated_version_of_the_treaty_
establishing_the_european_atomic_energy_community_en.pdf (Accessed 2018.01.22)

51
up in Hungary, the country becoming part of the Eastern Bloc. With the fall of the communist
system in Hungary in 1989 and the tearing of the Iron Curtain, Hungary pursued a policy of
European and Euroatlantic integration, joining NATO in 1999 and becoming a Member State of
the European Union in 2004. Despite this geopolitical orientation in the post-Cold War period,
Hungary has continued to maintain ties with the Russian Federation in various areas. One
important aspect of Hungarian-Russian relations which can be said to have began during the
communist period and which has continued until the present day relates to the area of nuclear
energy. Cooperation in this area began in 1955, with the signing of a bilateral agreement which
led to the establishment of a Soviet VVER-type reactor known as the Budapest Research
Reactor.250 Later, on 28 December 1966, Hungary and the Soviet Union signed an
intergovernmental agreement for the building of a nuclear power plant in Hungary, and the
following year Paks, a location 100 km from Budapest, was selected as the site for the plant.251
The construction of the Paks Nuclear Power Plant was Hungary’s largest industrial project of the
20th century. 252 Between 1974 and 1987 four Soviet-designed VVER-440/V213 units were
installed at the Paks site. 253 The Paks NPP is Hungary’s only nuclear power plant, belonging to the
Magyar Villamos Művek Zártkörűen Működő Részvénytársaság (also known as “the MVM
Group”).254As of 2016, 51.3% of Hungary’s electricity was generated by the Paks Nuclear Power
Plant.255
Between 2032 and 2037 the Paks Nuclear Power Plant’s present operational units will need
to be shut down.256 In 2005 the Hungarian Parliament supported a plan to extend the lives of the
Paks units by a further 20 years.257 Later, in 2009 it approved in principle the commencement of

250
Rosatom: Cooperation with Hungary, http://rosatom-centraleurope.com/rosatom-in-country/history-of-
cooperation/hu/ (Accessed 2018.01.22)
251
Ibid.
252
KATONA, Tamás János (2009): Nuclear Energy in Hungary, Hungarian Geographical Bulletin 2009. 58 (4). 244,
http://real-j.mtak.hu/2891/2/HunGeoBull_2009_4.pdf (Accessed 2018.01.22)
253
Ibid.
254
European Commission (2017): Commission Decision of 6.3.2017 on the Measure/Aid Scheme/State Aid
S.A.38454 – 2015/C (ex 2015/N) which Hungary is planning to implement for supporting the development of two
new nuclear reactors at Paks II nuclear power station. Brussels, 6.3.2017, C(2017) 1486 final, 3,
http://ec.europa.eu/competition/state_aid/cases/261529/261529_1932592_684_2.pdf (Accessed 2018.01.22)
5.
255
Paks II: Why is it necessary to construct new nuclear power plant units in Hungary?,
http://www.paks2.hu/en/NuclearEnergy/RudimentsOfEngineering/Lapok/WhyIsItNecessary.aspx (Accessed
2018.01.22)
256
Ibid.
257
World Nuclear News (2007): More power for Paks. 25 May 2007, http://www.world-nuclear-
news.org/newsarticle.aspx?id=13462 (Accessed 2018.01.22)

52
activities relating to the preparation for expanding the Paks Nuclear Power Plant. 258 This involved
the granting of consent for the preparation of the site for new nuclear power plant units. 259 In the
Hungarian government’s 2011 National Energy Strategy 2030, nuclear energy was listed as one of
the key means of increasing Hungary’s energy independence, and that it aimed at “the long-term
preservation of nuclear energy in the energy mix”.260
The Hungarian state committed to fully finance the development of two new nuclear
reactors for the benefit of the entity known as Paks II (MVM Paks II Nuclear Power Plant
Development Private Company Limited by Shares), which shall be the owner and the operator of
the new reactors.261 This involved Hungary entering into an agreement with the Russian
government to build two additional 1200 MW units at the site of the Paks Nuclear Power Plant. 262
Specifically, the Hungarian government and the Russian state corporation Rosatom signed an
intergovernmental agreement (IGA) on 14 January 2014 relating to the financing, development,
constructing and commissioning of these new units. 263 This was later adopted by the Hungarian
Parliament under the name of Act II of 2014, 264 coming into effect on 12 February 2014.265
Additionally, Russia agreed to help Hungary finance the development of the Paks II Nuclear Power
Plant through a state loan. 266 This is governed by a financing intergovernmental agreement,
providing 10 billion euros in revolving credit to be used for designing, constructing and

258
FODOR, László – BÁNYAI, Orsolya (2014): Some Environmental Law Questions Related to the Extension of
Paks Nuclear Power Plant, Environmental Engineering and Management Journal, “George Asachi” Technical
University of Iasi, Romania, November 2014. Vol.13, No.11. 2758,
www.eemj.icpm.tuiasi.ro/pdfs/vol13/no11/Full/7_677_Fodor_14.pdf (Accessed 2018.01.10)
259
Paks II Zrt: Company Information, http://www.paks2.hu/en/PaksII/CompanyInformation/Lapok/default.aspx.
(Accessed 2018.01.10)
260
Ministry of National Development (2012): National Energy Strategy 2030, 2012, 11, 12, http://2010-
2014.kormany.hu/download/7/d7/70000/Hungarian%20Energy%20Strategy%202030.pdf (Accessed 2018.01.10)
261
European Commission: Commission Decision of 6.3.2017 on the Measure/Aid Scheme/State Aid, i.m. 3.
262
MVM Paks II: Implementation of New Nuclear Power Plant Units, at the Paks Site, Environmental Impact
Assessment Study, Simplified Public Summary, 19,
http://www.paks2.hu/en/Dokumentumtarolo/SIMPLIFIED%20PUBLIC%20SUMMARY_EN.pdf (Accessed
2018.01.10)
263
Paks II Zrt (2015): Company Information, and Rothschild, Economic analysis for the Paks II nuclear power project,
September 2015, 10,
http://www.kormany.hu/download/a/84/90000/2015%20Economic%20analysis%20of%20Paks%20II.pdf (Accessed
2018.01.10)
264
2014. évi II. törvény a Magyarország Kormánya és az Oroszországi Föderáció Kormánya közötti nukleáris energia békés
célú felhasználása terén folytatandó együttműködésről szóló Egyezmény kihirdetéséről
265
Paks II Zrt 2015: Company Information, and Rothschild, i.m,. 10.
266
European Commission: Commission Decision of 6.3.2017, i.m. 4.

53
commissioning the new units at Paks II.267 In addition to these funds, Hungary itself will provide
up to 2.5 billion euros from the national budget for the financing of the Paks II development. 268
In February 2014 the Hungarian government received notification from the European
Commission’s Directorate-General for Energy that it, in the words of the Director-General, “did
not find any element that would as of itself impede the application of the Euratom Treaty in the
meaning of its Article 103”.269 Later the Euratom Supply Agency raised concerns about the initial
Paks supply deal, requesting that other industry players in the future apart from the Russians be
able to transport fuel to the Paks nuclear plant. 270 However, modifications were made which
followed the “Finnish model”, with the agreement including the stipulation that the plant’s fuel
will be supplied by Russia, and after this period other suppliers will be able to be invited to offer
compatible fuel for the reactor.271 Later, in September 2015, the European Commission, after
reviewing the documents submitted in relation to the Paks II project pursuant to Article 41 of the
Euratom Treaty, notified Hungary that the Paks II project meets the Treaty’s objectives. 272
However, the European Commission raised and examined two issues relating to Paks II, which
were whether European Union public procurement rules had been breached, and whether the
funding of the project could be considered as state aid. 273

267
Ibid
268
Ibid.
269
Erdély Online (2014): EC energy directorate vets Paks deal for Euratom Treaty compliance, 1 March 2014,
http://www.erdon.ro/ec-energy-directorate-vets-paks-deal-for-euratom-treaty-compliance/2492788 (Accessed
2018.01.10)
270
SZÉKELY, Tamás (2015): Paks Upgrade: Hungary, EU Come To Agreement Based On “Finnish Model”,
Hungary Today, 25 March 2015, https://hungarytoday.hu/paks-upgrade-hungary-eu-come-agreement-based-finnish-
model-12483/ (Accessed 2019.04.07)
271
Reuters (2015): Hungary reaches deal on Russian nuclear fuel supply with Euratom - MTI, 25 March 2015,
https://af.reuters.com/article/worldNews/idAFKBN0ML0KG20150325 (Accessed 2019.04.07); Website of the
Hungarian Government – Prime Minister’s Office (2015): The fuel supply contract of the Paks Nuclear Power Plant
will be finalized based on the Finnish model, 26 March 2015, http://www.kormany.hu/en/prime-minister-s-
office/news/the-fuel-supply-contract-of-the-paks-nuclear-power-plant-will-be-finalized-based-on-the-finnish-model
(Accessed 2019.04.07)
272
World Nuclear News (2015): Hungary meets Euratom Treaty objectives for Paks II, 15 September 2015,
http://www.world-nuclear-news.org/NN-Hungary-meets-Euratom-Treaty-objectives-for-Paks-II-15091501.html
(Accessed 2018.01.10)
273
World Nuclear News (2016): Hungary’s Paks II project clears procurement hurdle, 22 November 2016,
http://www.world-nuclear-news.org/NN-Hungarys-Paks-II-project-clears-procurement-hurdle-22111601.html
(Accessed 2018.01.10)

54
2.4.2 Launching of infringement procedure

In November 2015 the European Commission launched an infringement procedure against

Hungary in relation to what it claimed was a lack of compliance with regards to public procurement
rules. 274 Initially, the Commission claimed that the awarding of the Paks II project to Rosatom
went against Directives 2004/17/EC275 and 2004/18/EC,276 both of which embody the principles
of “transparency, non-discrimination and equal treatment”, 277 concepts which have their basis in
the Treaty on the Functioning of the European Union.278
Though Hungary utilized several arguments in response to the infringement procedure,279
it was the so-called “technical exclusivity” argument which won over the Commission. The
legislation relevant to this issue is Article 50 of Directive 2014/25/EU, named “Use of the
negotiated procedure without prior call for competition”. The article states that “Contracting
entities may use a negotiated procedure without prior call for competition” in certain cases. Article
50(c) states that “Where the works, supplies or services can be supplied only by a particular
economic operator for any of the following reasons”, which, according to sub-section (ii) includes
“competition is absent for technical reasons”. Section C goes on to elaborate on this point, stating
that such an exception “shall only apply when no reasonable alternative or substitute exists and
the absence of competition is not the result of an artificial narrowing down of the parameters of
the procurement”. Hungary argued that, in this case, the awarding of the contract to Rosatom for

274
European Commission (2015): November infringements package: key decisions, Fact Sheet, Brussels, 19
November 2015, http://europa.eu/rapid/press-release_MEMO-15-6006_en.htm. (Accessed 2018.01.11)
275
Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the
procurement procedures of entities operating in the water, energy, transport and postal services sectors, OJ L 134,
30.4.2004, p. 1–113, https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32004L0017, (Accessed
2018.01.11)
276
Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of
procedures for the award of public works contracts, public supply contracts and public service contracts, OJ L 134,
30.4.2004, p. 114–240, https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex:32004L0018, (Accessed
2018.01.11)
277
The European Commission proposed amendments to these two Directives in December 2011, which led to the
adoption of two new Directives (Directive 2014/24/EU, which repealed Directive 2004/18/EC, and Directive
2014/25/EU, which repealed Directive 2004/17/EC) by the Council of the Eurppean Union and the European
Parliament on 26 February 2014, and were officially repealed on 17 April 2017. See European Commission: Legal
rules and implementation, http://ec.europa.eu/growth/single-market/public-procurement/rules-implementation_en
(Accessed 2018.01.11)
278
Ibid.
279
This included that the IGA and the Implementation Agreements relating to the Paks II development fall within the
exemption relating to international agreements contained in Article 22 of Directive 2014/25/EU, see European
Commission, Commission Decision of 6.3.2017, i.m. 43.

55
the Paks expansion without a public procurement procedure was justified according to the above
cited regulation. 280
In November 2016 the infringement case against Hungary was closed. 281 Lucia Caudet,
European Commission spokeswoman, made the statement that "Hungary has sufficiently justified
that the use of the so-called technical exclusivity exemption, which means that when the technical
and safety requirements of the project can only be met by one company, it can be compatible with
EU laws to award the contract directly".282 It is believed that a French precedent was vital in the
Commission coming to its decision in favour of Hungary. 283 Specifically, this involved France
awarding the state-controlled Areva the contract to construct the Flamanville 3 nuclear reactor.284
The Commission decided, using Article 40(3) of Directive 2004/17/EC as a legal basis, that in this
case, due to the technical specifications of the contract, that the French government was justified
in its action to grant Areva the contract for the nuclear reactor without a public procurement
procedure.285

2.4.3 Investigation into state aid

On 13 March 2014 the European Commission began a preliminary investigation into the possibility
of granting unlawful state aid under Article 107 (1) TFEU286 in connection to the Paks II nuclear

280
Ibid.
281
European Commission (2017): State Aid: Commission clears investment in construction of Paks II nuclear power
plant in Hungary, Press Release, Brussels, 6 March 2017, http://europa.eu/rapid/press-release_IP-17-464_en.htm
(Accessed 2018.01.11) The Commission itself did not publish its official decision to drop the infringement procedure
against Hungary, see STEFANINI, Sara (2017): UK, France blazed trail for Hungary nuclear deal, Politico, December
1 2017, https://www.politico.eu/article/hungary-nuclear-approval-expected-thanks-to-uk-and-france-precedent/
(Accessed 2018.01.11)
282
HERSZENHORN, David M. – STEFANIN, Sara – HIRST, Nicholas (2016): Questions grow over Hungarian no-
bid nuclear deal, Politico, 18 November 2016, https://www.politico.eu/article/questions-grow-over-hungarian-no-bid-
nuclear-deal/ (Accessed 2018.01.11)
283
STEFANINI (2017): i.m.
284
Ibid.
285
European Commission (Matthias Petschke) (2008): Your complaint no 2007/4189 against France – direct award
to AREVA by „Electricité de France” (EDF) of the reactor of the new nuclear power plant at Flamanville, Brussels,
5 December 2008, MARKT C/2/AP/mm D(2008) 64760, 2, https://g8fip1kplyr33r3krz5b97d1-wpengine.netdna-
ssl.com/wp-content/uploads/2017/01/GreenpeaceFlamanvilleCommissionLetter.pdf (Accessed 2018.01.11)
286
According to Article 107(1) of the Treaty on the Functioning of the European Union, “Save as otherwise provided
in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts
or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so
far as it affects trade between Member States, be incompatible with the internal market”.

56
power plant’s construction.287 Later, the Commission also opened an in-depth investigation into
the Hungarian government’s plans to provide investment support for the Paks II project in
November 2015.288 This was according to the procedure set out in Article 108(2) of the Treaty on
the Functioning of the European Union.289 The Commission wished to assess the issue of “whether
a private investor would have financed the project on similar terms or whether Hungary’s
investment constitutes state aid”.290
The European Commission came to the conclusion291 that the financial support provided
by Hungary for the construction in Paks of two new nuclear reactors does involve state aid. 292 It
approved such support due to Hungary making commitments to limit distortions with regards to
competition.293 European Commissioner in charge of competition, Margrethe Vestager made the
statement that Hungary has the right according to EU treaties to invest in Paks II’s construction,
and that the Commission’s task is to make sure that there is a minimization of the distortation of
competition in the energy market. 294 She stated that the Commission approved the investment
under the state aid rules of the European Union due to the “substantial commitments” that Hungary
made. 295
As with the issue of public procurement and technical exclusivity, in relation to State aid
an important precedent exists that was of assistance in this instance, which was the United

287
European Commission (2017): Commission Decision of 6.3.2017, i.m, 2.
288
European Commission (2015): State Aid: Commission opens in-depth investigation into Hungarian investment
support for Paks II nuclear power plant, Press Release, Brussels, 23 November 2015, http://europa.eu/rapid/press-
release_IP-15-6140_en.htm (Accessed 2018.01.13)
289
European Commission (2015): State Aid SA.38454 (2015/C) (ex 2015/N) – Hungary Possible aid to the Paks
nuclear power station, Brussels, 23.11.2015, C(2015) 8227 final, 1,
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38454 (Accessed 2018.01.13)
290
European Commission (2015): Commission opens in-depth investigation into Hungarian investment support for
Paks II nuclear power plant, i.m.
291
The press release states that a non-confidential version of the Commission’s decision will become available once
the relevant confidentiality issues reach a resolution.
292
European Commission (2017): i.m.
293
Ibid.
294
Ibid.
295
Ibid. These commitments include: - To avoid overcompensation of the operator of Paks II, any potential profits
earned by Paks II will either be used to pay back Hungary for its investment or to cover normal costs for the operation
of Paks II. Profits cannot be used to reinvest in the construction or acquisition of additional generation capacity; To
avoid market concentration, Paks II will be functionally and legally separated from the operator of the Paks nuclear
power plant (the incumbent MVM Group) and any of its successors or other state-owned energy companies; To
ensure market liquidity, Paks II will sell at least 30% of its total electricity output on the open power exchange. The
rest of Paks II's total electricity output will be sold by Paks II on objective, transparent and non-discriminatory terms
by way of auctions. See Ibid.

57
Kingdom’s subsidizing the new Hinkley Point C nuclear reactors.296 After an in-depth
investigation, the Commission approved the plan, as the UK government agreed to significant
modifications in relation to the financing of the project which would avoid distortions of
competition within the Single Market.297
Despite the European Commission having given its official approval for the Paks II project,
some opposition to it still exists within quarters of the European Union. In particular Austria, which
has a longstanding opposition to nuclear energy, 298 strongly denounced the European
Commission’s decision, with the then Vice Chancellor Reinhold Mitterlehner saying in response
to the Commission’s approval of the Paks II plan that “Austria can’t accept that the European
Commission considers that subsidizing the construction of nuclear power plants is harmless”.299
Furthermore, the then Chancellor Christian Kern shortly before his electoral defeat in October
2017 announced that Austria would indeed file a lawsuit against the Commission’s approval of
Paks II.300 On January 24 2018 the recently elected Austrian government led by Chancellor

296
European Commission (Vestager Margrethe) (2016): Letter, Brussels, 6 July 2016, Ares(2016)3039407, 1,
https://g8fip1kplyr33r3krz5b97d1-wpengine.netdna-ssl.com/wp-
content/uploads/2016/11/VestagerLetterPaksIIStateAid.pdf (Accessed 2018.01.13)
297
European Commission (2014): State aid: Commission concludes modified UK measures for Hinkley Point nuclear
power plant are compatible with EU rules, Press Release, Brussels, October 8 2014, http://europa.eu/rapid/press-
release_IP-14-1093_en.htm (Accessed 2018.01.13) . In recent times, there has been work towards modifying Hungary
and Russia’s financing agreement in relation to Paks, which would entail the former only commencing the repayment
of the loan only when the two new reactors actually start supplying power, this development being a result of a
European Union review (see Budapest Business Journal (2019): Hungary working to modify funding for Paks nuclear
upgrade, 28 January 2019, https://bbj.hu/energy-environment/hungary-working-to-modify-funding-for-paks-nuclear-
upgrade_160650 (Accessed 2019.02.13) This modification requires the Hungarian parliament’s approval (Reuters
(2019): Hungary, Russia to modify financing for Paks nuclear plant expansion – minister, 25 January 2019,
https://www.reuters.com/article/hungary-nuclearpower-financing/hungary-russia-to-modify-financing-for-paks-
nuclear-plant-expansion-minister-idUSL8N1ZP1SZ (Accessed 2019.02.13)
298
Austria filed a lawsuit in 2015 with the European Court of Justice in response to the European Commission’s
approval of the UK government’s state aid for the Hinkley Point C nuclear plant. See World Nuclear News (2015):
Austria files action against Hinkley Point project, 6 July 2015, http://www.world-nuclear-news.org/NN-Austria-files-
legal-action-against-Hinkley-Point-project-0607201502.html (Accessed 2019.02.13) Subsequently, in July 2018 the
General Court of the European Union rejected the lawsuit that was filed by Austria in relation to the matter, with the
court stating that the European Commission was not in error when it accepted the United Kingdom’s argument in
relation to the issue that it was in the public interest to construct the plant (see World Nuclear News (2018): Austrian
case against Hinkley Point C aid rejected, 12 July 2018, http://www.world-nuclear-news.org/NN-Austrian-case-
against-Hinkley-Point-C-aid-rejected-1207184.html (Accessed 2019.02.13). Despite this development, Austria stated
that it would still continue with its challenge to the Paks project. (See AULNER, Francois - CHEE, Foo Yun (2018):
EU court backs approval of UK Hinkley nuclear plant, Reuters, 12 July 2018, https://uk.reuters.com/article/uk-eu-
nuclear-uk-austria/eu-court-backs-approval-of-uk-hinkley-nuclear-plant-idUKKBN1K20TB?il=0 (Accessed
2019.02.13)
299
The Local (2017): Austria fumes at Hungary’s Kremlin-backed nuclear plant, 7 March 2017,
https://www.thelocal.at/20170307/austria-fumes-at-hungary-kremlin-backed-nuclear-plant (Accessed 2018.01.13)
300
Phys.org (2017): Austria to sue over Hungary nuclear plant extension, 13 October 2017,
https://phys.org/news/2017-10-austria-sue-hungary-nuclear-expansion.html (Accessed 2018.01.13)

58
Sebastian Kurz decided to sue the European Commission for its decision to allow the expansion
of the Paks Nuclear Power Plant,301 and officially lodged a complaint with the European Court of
Justice on February 22.302 Margrethe Vestager responded that it took such a decision by the
Austrian government “very seriously” and that the Commission was prepared to defend its decision
“with the arguments that are in the decision”.303 Hungarian Foreign Minister Péter Szijjártó stated
that the action of the Austrian government would have no effect on the construction schedule of
the two new units at Paks.304

***

Hungary’s dealings with Russia in the development of the Paks II project, show that despite certain
disagreements and tensions between the European Union and the Russian Federation with regards
to various issues, there are EU Member States that feel that it is in their own vital interest to pursue
and deepen their relations with Russia in certain specific areas such as energy. The case of Paks II
illustrates very clearly that with EU membership comes certain obligations and restrictions which
may at times somewhat impede completely independent action when pursuing relations with third
countries such as Russia. This may also be seen when it comes to the sanctions that have been
imposed on Russia as a result of events in Ukraine, where EU Member States face certain
restrictions when dealing with the former. In the case of Paks II, certain doubts and opposition
with regards to the project’s compliance with EU law were able to be overcome. This example
illustrates the relevance of both the intergovernmental and neofunctionalist points of view, that is,
those perspectives which place an emphasis on both the important role of individual nation states
in the integration process, and also that which places the greatest importance on the supranational
structures and authorities that are created as part of that integration process. Here we see Hungary,
an individual Member State pursuing a course it sees consistent with its own interests in a particular
situation in the realm of energy. However, the supranational European Union structure inhibited

301
ZALAN, Eszter (2018): Austria sues Commission over Hungary’s nuclear plant, EUobserver, 25 January 2018,
https://euobserver.com/energy/140690 (Accessed 2018.02.01)
302
Euractiv (2018): Austria sues over EU approval of Hungary nuclear plant, 23 February 2018,
https://www.euractiv.com/section/politics/news/austria-sues-over-eu-approval-of-hungary-nuclear-plant/. (Accessed
2018.02.25)
303
ZALAN, i.m.
304
TASS Russian News Agency (2018): Construction of new units at Hungary’s Paks NPP to begin as scheduled –
foreign minister, 24 January 2018, http://tass.com/economy/986578 (Accessed 2018.02.01)

59
completely free action in this particular situation, and it was necessary to convince that
supranational structure that this action was consistent with its norms and rules. Thus, it can be said
that this is an example of the importance of both the individual nation states and supranational
structure in the European integrative space.

60
 CHAPTER 3

THE LEGAL FRAMEWORK OF THE EUROPEAN UNION’S RELATIONS WITH

UKRAINE

In the following analysis of the the European Union’s external relations with Ukraine, a similar
structure shall be employed as in the case of Russia, which involves a survey of the major and
most vital instruments that exist between the EU and Ukraine. Firstly there shall be an examination
of Ukraine’s Partnership and Cooperation Agreement with the European Union; this is followed
by the Action Plan signed between the two in the context of the European Neighbourhood Policy;
and lastly the Association Agreement signed between the two. It shall be seen, in particular with
the signing of the last agreement, that Ukraine has committed itself to the course of deep and
substantial integration with the European Union, and thus going beyond the level which Russia
has sought to attain in this area. There shall also be an examination of Ukraine’s attempts at
approximating to the European Union’s energy acquis, which has been substantial, also signifying
an approach that differs markedly from that adopted by Russia with regards to the same issue. The
adoption of the Association Agreement also presents certain opportunities for Ukraine in relation
to its relationship with non-EU Member States. One such example is the country’s relations with
China, which, as shall be seen, have a possibility for intensification as a result of Ukraine now
having achieved a more integrated relationship with the European Union. Additionally, there shall
also be a brief survey of suggestions made in relation to the Association Agreement between the
European Union and Ukraine being a possible model for the United Kingdom’s relationship with
the EU post-Brexit, and a case study in relation to certain aspects of Hungary’s relations with
Ukraine.

3.1 The European Union-Ukraine Partnership and Cooperation Agreement

Ukraine attained its independence from the Soviet Union in 1991, and from that time Ukraine set
out establishing bilateral relations with the European Community, with the latter recognizing
Ukraine’s sovereignty as a result of the referendum calling for independence from the Soviet

61
Union.305 It quickly became the general consensus that Ukraine would pursue a policy of European
integration.306 On December 25 1990 the Verkhovna Rada of the URSR in its resolution „On the
implementation of the Declaration of State Sovereignty of Ukraine in the sphere of foreign
relations” stated that it was a goal of Ukrainian foreign policy „to ensure direct participation of
Ukraine in the general European process and European structures”.307 The 1993 Fundamental
Guidelines in Ukrainian Foreign Policy308 also stated that „the prospective objective of Ukrainian
foreign policy is Ukraine’s membership of the European Community...”309 This desire and vision
is rooted in a number of factors, part of which relates to the feeling that Ukraine geographically,
historically and culturally belongs to the broader European civilization, coupled with the view that
European Union integration will reap economic and security benefits, the latter particularly
relating to Ukraine’s complex geopolitical position.310 Furthermore, the very concept of Ukrainian
independence was viewed by many as being explicitly connected to the idea of a “return to
Europe”.311 However, it must be said that the degree of this commitment to pursuing integration
with the European Union has differed from administration to administration, based on different
policy orientation and priorities, with often a balancing, multivector approach being pursued so as
to manage its geopolitical position and various differing interests, inclinations and orientations, in
particular when it comes to the way in which it handles its relationship with the Russian

305
KUZMIN, Denys – MAKSYMENKO, Iryna (2012): Analysis of the EU – Ukraine Relations in the Context of the
Association Agreement and Related Documents and the EU 2014-2020 Financial Perspective, Bridge: International
Project co-financed by the European Commission, EuropeAid, 465,
http://www.iscomet.org/images/documents/Publikacije/ANALYSES%20OF%20EU%20%E2%80%93%20PARTN
ER%20COUNTRIES%20RELATIONS%20REFLECTIONS%20FROM%20BELARUS,%20MOLDOVA,%20RU
SSIA%20AND%20UKRAINE.pdf (Accessed 2019.02.15)
306
KUZIO, Taras (1999): Slawophiles versus Westernizers: Foreign Policy Orientations in Ukraine. In SPILLMANN,
Kurt R. - WENGER, Andreas, - MÜLLER, Derek eds.; Between Russia and the West: Foreign and Security Policy of
Independent Ukraine. Bern, Peter Lang, 56.
307
Quoted in PALAGNYUK, Yuliana (2013): Formation of State Policy of Ukraine towards European Integration.
Przeglad Politologiczny, Issue 4, 251-252, https://repozytorium.amu.edu.pl/bitstream/10593/10552/1/pp-4-2013-251-
262.pdf (Accessed 2019.02.15)
308
This document was adopted by the Ukrainian Verhovna Rada on 2 July 1993. See Ministry of the Foreign Affairs
of Ukraine, History and Traditions of the foreign policy service of Ukraine, https://mfa.gov.ua/en/about-mfa/history
(Accessed 2019.02.17)
309
Quoted in PALAGNYUK (2013): i.m., 252.
310
WOLCZUK, Kataryna (2004): Integration without Europeanisation: Ukraine and its policy toward the European
Union, European University Institute Working Papers: Robert Schuman Centre for Advanced Studies, No. 15, 6-7,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2344806 (Accessed 2019.02.15)
311
KUZIO, Taras (2002): European, Eastern Slavic, and Eurasian: National Identity, Transformation, and Ukrainian
Foreign Policy. In MORONEY, Jennifer D.P - KUZIO, Taras - MOLCHANOV, Mikhail eds.: Ukrainian Foreign
and Security Policy: Theoretical and Comparative Perspectives, Praeger: Westport, Connecticut, and London, 202.

62
Federation.312 Yet, in general, and at least on an official level, it can be said that the declared aim
of the independent Ukrainian state has been to pursue the path of European integration. 313
Upon gaining independence Ukraine, as well as the other former Soviet states, inherited
the previously mentioned Trade and Cooperation Agreement signed between the European
Community and the Soviet Union in 1989. 314 The collapse of the USSR essentially led to the
European Community being faced with a number of challenges to deal with, one of the most vital
and urgent being the need to create a specific strategy of engagement with these neighbouring
post-communist states.315 As has already mentioned, Europe Agreements were signed with certain
Central European states. In contrast, former Soviet Republics instead signed Partnership and
Cooperation Agreements which were to act as the basis of the relationship,316 with the European
Union and Ukraine signing their PCA on June 16 1994, which was the first of its kind to be signed
by a member state of the CIS.317 The PCA only came into effect on March 1 1998, due to the need
for the Parliaments of all 15 EU Member States having to approve it. 318 However, it is also
generally believed that this delay in ratification was due to Ukraine at that time being a low priority
for the European Union. 319
The Agreement stated that it seeks to strengthen the “links and to establish partnership and
co-operation” between the two entities. 320 More specifically, the aims of the PCA are articulated
in Article 1, which include providing a framework for a political dialogue which will allow for the
parties to develop a close political relationship; the promotion of trade, investment and economic
relations of a harmonious nature between the two parties and to aid in sustainable development; to
create a foundation for mutually advantageous cooperation in the economic, financial, social,

312
FREIRE, Maria Raquel (2008): The Russian Federation and the CIS. In KOLODZIEJ, Edward A. - KANET, Roger
E. eds.: From Superpower to Besieged Glogal Power: Restoring World Order After the Failure of the Bush Doctrine.
Athens and London: The University of Georgia Press, 163.
313
WOLCZUK, Kataryna (2004): Ukraine’s Policy towards the European Union: A Case of ’Declarative
Europeanization’, 2 http://www.batory.org.pl/ftp/program/forum/eu_ukraine/ukraine_eu_policy.pdf (Accessed
2019.02.15)
314
PALAGNYUK (2013): i.m., 251.
315
DELCOUR (2011): i.m., 25.
316
HILLION (2006): i.m., 14.
317
KUZMIN - MAKSYMENKO (2012): i.m., 465
318
SCHNEIDER (2001): i.m. 68.
319
PIONTEK, Eugeniusz (2006): Ukraine. In BLOCKMANS, Steven – LAZOWSKI, Adam (eds.), The European
Union and Its Neighbours, T.M.C Asser Instituut, The Hague, and the authors, 502.
320
Partnership and Co-operation Agreement Between the European Communities and their Member States, and
Ukraine, L49, 19/02/1998, 4,
http://ec.europa.eu/world/agreements/downloadFile.do?fullText=yes&treatyTransId=659, (Accessed 2017.11.30)

63
cultural, and civil scientific technology sectors; and to provide support to Ukraine in the country’s
attempts to strengthen democracy, and to undertake economic development, aiming to achieve a
market economy.
Article 51 states that both Ukraine and the Community recognize that the development of
economic relations between the two is predicated upon the former’s approximating to the
Community’s legislation, and to be compatible with it. 321
There are various areas in which the
PCA called for harmonisation with EU law. This included areas such as intellectual, industrial and
commercial property rights (Articles 50), customs law, company law, banking law, company
accounts and taxes, intellectual property, worker protection, financial services, rules on
competition, public procurement, protection of health and life of humans, animals and plants, the
environment, consumer protection, indirect taxation, technical rules and standards, nuclear laws
and regulations, transport (Article 51) agriculture and the agro-industrial sector (Article 60), the
environment (Article 63), money laundering (Article 68), social protection (Article 71), consumer
protection (Article 75), customs (Article 76), and statistical cooperation (Article 77).
However, this commitment to embark upon legal approximation has been described as a
kind of “(soft) commitment”.322 Furthermore, it has been questioned as to what extent the PCA
was a truly effective legal instrument in deepening relations between the European Union and
Ukraine. For example, despite the statements calling for legal approximation, the EU did not have
a clearly articulated goal and strategy in relation to non-candidate neighbors such as Ukraine.323
The PCA itself lacked clarity with regards to the obligations that it contained, such as the extent
to which they were binding, the consequences of their implementation or the deadlines set with
regards to them. 324 Furthermore, such PCAs did not aim at providing an EU membership

321
It should be noted, however, that the voluntary harmonization of Ukrainian law with Community law began even
before the PCA’s coming into force. See MURAVYOV, Viktor (2006): Legal approximation: evidence from Ukraine,
at workshop, The European Neighourhood Policy: A Framework for Modernisation, European University Institute, 1-
2 December 2006, 2,
https://www.eui.eu/Documents/DepartmentsCentres/Law/Professors/Cremona/TheEuropeanNeighbourhoodPolicy/P
aperMuravyov.pdf (Accessed 2019.02.15)
322
PETROV Roman (2014): Legislative Approximation and application of EU law in Ukraine. In VAN ELSUWEGE,
Peter, - PETROV, Roman eds.: Legislative Approximation and Application of EU Law in the Eastern Neighbourhood
of the European Union: Towards a Common Regulatory Space? London and New York, Routledge, 137.
323
VAN ELSUWEGE Peter - PETROV Roman (2014): Setting the scene: legislative approximation and application
of EU law in the Eastern neighbourhood of the European Union. In VAN ELSUWEGE, Peter - PETROV, Roman
eds.: Legislative Approximation and Application of EU Law in the Eastern Neighbourhood of the European Union:
Towards a Common Regulatory Space, London, Routledge, 2-3.
324
PIONTEK (2006): i.m. 509.

64
perspective for the signatory country, as evidenced by the omission of a reference in the PCAs
preamble to future integration of Ukraine into the European Union. 325 This is despite the fact that
there is a striking similarity between the abovementioned Europe Agreements and PCA in terms
of approximation objectives.326 Instead, the PCAs ultimately sought to foster cooperation between
the signatories.327 In addition, the Agreement’s primary focus was the facilitation of trade by
Ukraine’s adoption of WTO norms and standards, with economic issues having pre-eminence
throughout the document.328 In addition, Ukraine was also accused of violating several of the
binding provisions within the Agreement, including all the major ones relating to the trading of
goods, which included freedom of transit, most-favoured-nation treatment, and the prohibiting of
quantitative restrictions on imports.329 It was claimed that the impression within the EU with
regards to Ukraine’s determination to implement the PCA was that it was “at most hesitant and at
times even ebbing”, and that the country was “in breach of virtually all key provisions on trade in
goods”.330 With regards to the opinion on the other side, Ukrainians themselves considered that
the restrictions on importing Ukrainian textile and steel products contradicted the concepts of
partnership and fairness that the PCA claimed to uphold and support.331

3.2 Action Plans and Ukraine

As discussed above, the main instrument for achieving the goals of the ENP are Action Plans (AP),
one of which was signed between the European Union and Ukraine in 2005. 332 As a result of the
enlargement of 2004, Ukraine became one of the EU’s most important neighbours to its East.333
According to Ukraine’s AP, this provided the opportunity for developing the EU and Ukraine’s

325
PETROV, Roman (2002): The Partnership and Co-operation Agreements With the Newly Independent States. In
OTT, Andrea - INGLIS, Kirstyn (eds.), Handbook on European Enlargement, T.M.C Asser Press, The Hague, 177.
326
PIONTEK (2006): i.m., 508.
327
PETROV (2002): i.m. 177.
328
KUBICEK, Paul (2005): The European Union and democratization in Ukraine, Communist and Post-Communist
Studies 38, 275.
329
WOLCZUK (2004): i.m. 17.
330
SCHNEIDER (2001): i.m., 71.
331
KUBICEK (2005): i.m. 275.
332
Joint Evaluation Report EU-Ukraine Action Plan, Brussels/Kyiv, March 2008,
http://www.eeas.europa.eu/archives/docs/ukraine/docs/ukraine_eu_joint_evaluation_2008_en.pdf (Accessed
2019.02.15)
333
SASSE (2010): i.m, 183.

65
relationship in the direction of “gradual economic integration and a deepening of political
cooperation”.334
The agreement was to cover a span of 3 years 335 and aimed to assist in the fulfilling of the
provisions of the already existing 1994 Partner and Cooperation Agreement and to support the
general objective of Ukraine’s integration into the EU’s structures.336 However, the AP also set
certain priorities that went beyond the PCA’s scope.337 The AP is divided into three sections, the
first part introducing the Agreement and outlining its major priorities and aims. The second section
forms the main bulk of the Agreement, and lists 71 priorities corresponding to the abovementioned
interests of the APs in general. The third and final section relates to the monitoring of the AP. The
AP mentions that, despite all the priorities listed being important, the following points were given
a particular emphasis: strengthening those institutions which guarantee both democracy and the
rule of law; to ensure the democratic nature of the 2005 and 2006 presidential elections in Ukraine;
safeguarding the principle of freedom of media and expression; the development of possibilities
with regards to EU-Ukraine consultations in the area of crisis management; increasing cooperation
in relation to disarmament and non-proliferation; strengthening cooperation in relation to regional
security and the common neighbourhood; Ukraine’s accession to the World Trade Organization;
over time removing non-tariff barriers and restrictions that inhibit bilateral trade and to bring into
being necessary regulatory changes; the improvement of the climate for investments;
implementation of tax reform; the establishment of a dialogue between the EU and Ukraine in
relation to visa facilitation; Ukraine’s gradual approximation to the EU’s legislation, standards
and norms; the encouragement of the dialogue in the areas of employment and best endeavours;
and the complete implementation of Memorandum of Understanding on the closure of the
Chernobyl nuclear power plant.338
In 2005 the Ukrainian government adopted a roadmap in order to assist in the
implementation of this program, 339 which was renewed annually for the AP’s duration.340 This

334
EU/Ukraine Action Plan (2005): Introduction, 1, https://library.euneighbours.eu//content/eu-ukraine-action-plan-0
(Accessed 2019.02.17)
335
Ibid, Priorities for Action, 3.
336
Ibid, Introduction, 1.
337
Ibid, Priorities for Action, 3.
338
Ibid, 3.
339
LUSHNYCSKY, Andrej N. – RIABCHUK, Mykola (2009): Ukraine on Its Meandering Path Between East and
West, Peter Lang AG, Bern, 48.
340
WOLCZUK (2009): i.m. 200.

66
roadmap essentially acted as a governmental programme which would act as a blueprint for reform
in Ukraine. 341 The Introduction of the AP states that the Action Plan’s implementation will lead to
a significant advancement in Ukraine approximating to the legislation, standards and norms of the
European Union, though at the same time acknowledging that the European Neighbourhood Policy
does not aim at the complete exportation of the acquis of the European Union to its partner states.342
As stated above in the AP’s priorities the goal at this stage was the “gradual approximation” of
Ukrainian law to that of the EU. As one commentator has said, Ukraine’s AP expresses “intentions
rather than explicit obligations”.343 In this sense, it can be said to follow a similar model of “soft
commitment” to approximating to EU standards as already set out in relation to the Partnership and
Cooperation Agreement. However, as shall be seen, a substantive change took place in the
relationship with the eventual signing of the Association Agreement negotiated between the two
parties.

3.3 The European Union-Ukraine Association Agreement

In 2007 negotiations began in order to bring about an Association Agreement between the
European Union and Ukraine.344 However, the negotiation, signing and finally ultimate ratification
of the Association Agreement between the European Union and Ukraine travelled down a very
dramatic path. An important development in this story was the election of Viktor Yanukovych as
President of Ukraine in 2010, who advocated the balancing of relations between both the Russian
Federation and the West.345 He himself had made it clear that though he planned to sign the
Association Agreement with the European Union in 2013, at the same time he also wished to
develop Ukraine’s relations with the Eurasian Customs Union. 346 After months of negotiations

341
Ibid, 201.
342
HERDINA (2007):, i.m., 502.
343
MURAVYOV (2006): i.m, 5.
344
European Commission: EU-Ukraine Association Agreement Guide to the Association Agreement, 1
http://eeas.europa.eu/archives/docs/images/top_stories/140912_eu-ukraine-associatin-agreement-quick_guide.pdf,
(Accessed 2018.01.30)
345
PEISAKHIN, Leonid (2015): Euromaidan Revisited: Causes of Regime Change in Ukraine One Year On, Kennan
Cable, Number 5, 2, https://www.wilsoncenter.org/sites/default/files/5-kennan%20cable-Peisakhin.pdf. (Accessed
2018.01.30)
346
Euractiv: Ukraine wants trade agreements with EU and Russia, January 4 2013,
http://www.euractiv.com/section/europe-s-east/news/ukraine-wants-trade-agreements-with-eu-and-russia/ (Accessed
2018.01.30)

67
over various details, 347 finally Viktor Yanukovych decided not to sign the Association Agreement
with the European Union at the Eastern Partnership’s Vilnius summit in November 2013348 and
finally accepted a $15 billion aid package from Russia, with a promise of a reduction of gas prices,
which it was said would have aided the country in returning the economy to growth and in order
to further modernize it.349 In response to this announcement, there began a protest movement in
Kyiv’s Maidan Square which ultimately saw the ousting of Viktor Yanukovych, and the election
of Petro Poroshenko as President of Ukraine on 25 May 2014.350 This development may be
described as the coming to power of a strongly pro-Western administration with what can almost
certainly be called a clear and unambiguous Euro-Atlantic orientation. On 21 March 2014 the
Agreement’s political provisions were signed, the economic component following on 27 June
2014.351 The whole Association Agreement had a provisional application from January 2016,352
while waiting for all the EU Member States to take the necessary steps to ratify it. 353

3.3.1 A “new generation” of Association Agreement

This Association Agreement is one of the so-called “new generation” of Association Agreements,
which is more extensive than what has gone before it, and has been defined by its
“comprehensiveness, complexity and conditionality.”354 Its comprehensiveness lies in the fact that

347
Deutsche Welle (2013): Ukraine scraps plan to sign historic pact with European Union, 21 November 2013,
http://www.dw.com/en/ukraine-scraps-plan-to-sign-historic-pact-with-european-union/a-17244405, (Accessed
2017.10.30)
348
SAFRANCHUK, Ivan (2016): Russia in a Reconnecting Eurasia: Foreign Economic and Security Interests, Center
for Strategic and International Studies, Rhode Island, 19, https://csis-prod.s3.amazonaws.com/s3fs-
public/publication/160907_Safranchuk_RussiaReconnectingEurasia_Web.pdf (Accessed 2017.10.30)
349
WALKER, Shaun (2013): Vladimir Putin offers Ukraine financial incentives to stick with Russia. The Guardian,
18 December 2013, https://www.theguardian.com/world/2013/dec/17/ukraine-russia-leaders-talks-kremlin-loan-deal,
(Accessed 2017.10.30)
350
President of Ukraine: Biography – Petro Poroshenko, https://www.president.gov.ua/en/president/petro-
poroshenko, (Accessed 2018.08.20)
351
PETROV - VAN ELSUWEGE (2016): i.m. 7.
352
European Commission: EU-Ukraine Association Agreement: „Quick Guide to the Association Agreement”, 1,
https://eeas.europa.eu/sites/eeas/files/071215_eu-ukraine_association_agreement.pdf, (Accessed 2017.12.01)
353
TEFFER, Peter (2017): Netherlands ratifies EU-Ukraine treaty. Euobserver, 30 May 2017,
https://euobserver.com/foreign/138060, (Accessed 2017.12.01)
354
PETROV, Roman - VAN DER LOO, VAN ELSUWEGE, Peter, The EU-Ukraine Association Agreement: A New
Legal Instrument of Integration Without Membership? (2016), Kyiv-Mohyla Law and Politics Journal, 1 (2015), 2,
https://www.researchgate.net/publication/303112803_The_EU-
Ukraine_Association_Agreement_A_New_Legal_Instrument_of_Integration_Without_Membership (Accessed
2019.02.15)

68
it deals with all the various elements in the relationship between the European Union and
Ukraine.355 As to the Association Agreement’s complexity, this is connected to its ambitious
character, attempting to bring about the integration of Ukraine into the European Union’s internal
market via the creation of a Deep and Comprehensive Free Trade Agreement.356 The conditionality
element is observable in the Association Agreement’s Preamble, which says that both Ukraine’s
political association and economic integration with the European Union is dependent upon the the
Agreement’s implementation, and Ukraine success in making sure that commons values are
respected, as well as in converging with the EU in the areas of politics, economics and law. 357
Furthermore, the Association Agreement explicitly mentions Ukraine’s “progressive
approximation of its legislation to that of the Union”.358 In these particulars it can be said that the
Association Agreement goes beyond anything which has existed previously in terms of the extent
of integration between the European Union and Ukraine, surpassing the abovementioned “soft”
nature of the Partnership and Cooperation Agreement, and thus, in this sense created a depth of
relations which also goes beyond that created by the EU-Russia Partnership and Cooperation
Agreement.
As to the actual composition of the Association Agreement, it is structured in the following
way: The Preamble, plus Seven Titles, these being: General Principles; Political Cooperation and
Foreign and Security Policy; Justice Freedom and Security; Trade and Trade related matters
(DCFTA); Economic and Sector Cooperation; Financial Cooperation with Anti-Fraud Provisions,
also containing Institutional, General and Final Provisions. Its contents includes a total of 43
Annexes laying out EU legislation required to be taken over by a certain date in time, as well as
Three Protocols.359 The Preamble discusses the values and the ideological basis of the Agreement,
and states that it recognizes “that Ukraine as a European country shares a common history and
common values with the Member States of the European Union (EU) and is committed to
promoting those values”.360 According to Article 1.2 of the Association Agreement, its aims are

355
Ibid, 3.
356
Ibid.
357
Ibid.
358
Article 1(2)(d).
359
European Commission (2016): EU-Ukraine Association Agreement „Guide to the Association Agreement”, i.m.
2.
360
According to the Preamble, the values that the EU and Ukraine share are: “respect for democratic principles, the
rule of law, good governance, human rights and fundamental freedoms, including the rights of persons belonging to
national minorities, non-discrimination of persons belonging to minorities and respect for diversity, human dignity

69
the promotion of a gradual rapproachement between Ukraine and the European Union the basis of
which is common values and special links, bringing Ukraine closer to the EU’s policies, and for
the country to participate with its programmes and agencies; to bring about a framework in order
to increase political dialogue with regards to mutual interests; the promotion, strengthening and
preservation of stability and peace on both an international and regional level, according to such
international agreements as the United Nations Charter, the Helsinki Final Act of 1975 of the
Conference on Security and Cooperation in Europe and the objectives of the Charter of Paris for a
New Europe of 1990; supporting Ukraine’s transition to a functioning market economy which
includes the country approximating to the EU’s legislation, bringing about the conditions leading
to Ukraine’s eventual integration into the European Union’s Internal Market, including the creation
of a Deep and Comprehensive Free Trade Area; increasing cooperation in the area of Justice,
Freedom and Security, reinforcing such principles as rule of law, respect for fundamental freedoms
and human rights; also, the Agreement makes for provision for increasing cooperation in other
areas that Ukraine and the European Union have in common.361
Article 2 lists various human rights instruments, such as the Helsinki Final Act of 1975 of
the Conference on Security and Cooperation in Europe and the Charter of Paris for a New Europe
of 1990, and the UN Universal Declaration of Human Rights and the European Convention on
Human Rights and Fundamental Freedoms as defining the concepts relating to democratic
princples, fundamental freedoms and human rights which, along with the rule of law concept, are
to form vital components of the Agreement, and are to act as a basis for both the signatories
external and domestic policies. Additionally, other important values are respect for sovereignty
and states’ territorial integrity, independence, and opposing any proliferation in weapons of mass
destruction.
Article 3 states that the EU and Ukraine recognise that their relationship is underpinned by
the free market economy model, and that these relations are enhanced by such values as rule of
law and good governance, combating against corruption, terrorism and trans-national organised
crime, as well as the promoting of sustainable development and the multilateral principle. In

and commitment to the principles of a free market economy, which would facilitate the participation of Ukraine in
European policies”.
361
Association Agreement between the European Union and its Member States, of the one part, and Ukraine, of the
other part, L 161/3, 29/5/2014, Official Journal of the European Union,
https://trade.ec.europa.eu/doclib/docs/2016/november/tradoc_155103.pdf (Accessed 2017.05.10)

70
relation to political dialogue and cooperation in the areas of foreign and security policy, Article 4
(1) sets out that political dialogue is to be strengthened and increased between the EU and Ukraine,
which will aid in foreign and security matter convergence, leading to Ukraine being more deeply
involved the broader European security area. In relation to the political dialogue between the
parties, Article 4(2) elaborates on this, stating that it aims at the deepening of the political
association between the parties, and aims at both a convergence and effectiveness in political and
security policy. the promotion, via multilateralism, of stability and security in the international
arena; strengthening between the European Union and Ukraine cooperation and dialogue relating
to international security and crisis management, with a particular emphasis on global and regional
threats and challenges; the fostering of cooperation in order to achieve in Europe stability, security
and peace; among other principles, the strengthening of democracy and the rule of law, as well as
the principles of state independence and sovereignty, as well as the integrity of states’ borders.
As to matters of justice and judicial affairs, according to Article 14 the parties are place a
special importance on strengthening rule of law and the reinforcing of institutions in
administration, law enforcement as well as the administration of justice. The strengthening of the
judiciary is to be a particular aim of cooperation, which includes focusing on its efficiency,
impartiality and independence. 362
In relation to trade matters, Article 25 states that there is to be the establishment between
the parties of a free trade area over a period of 10 years at most, a period which begins from the
time the Agreement enters into force. The Preamble of the Agreement states “that such a Deep and
Comprehensive Free Trade Area, linked to the broader process of legislative approximation, will
contribute to further economic integration with the European Union Internal Market as envisaged
in this Agreement”. This involves an elimination of customs duties, fees and other charges on
goods (Article 27), and the Agreement includes stipulations relating to such areas as trade

362
Article 24 further elaborates upon the issue of legal cooperation, stating that: “1. The Parties agree to further
develop judicial cooperation in civil and criminal matters, making full use of the relevant international and bilateral
instruments and based on the principles of legal certainty and the right to a fair trial.; 2. The Parties agree to facilitate
further EU-Ukraine judicial cooperation in civil matters on the basis of the applicable multilateral legal instruments,
especially the Conventions of the Hague Conference on Private International Law in the field of international Legal
Cooperation and Litigation as well as the Protection of Children; 3. As regards judicial cooperation in criminal
matters, the Parties shall seek to enhance arrangements on mutual legal assistance and extradition. This would
include, where appropriate, accession to, and implementation of, the relevant international instruments of the United
Nations and the Council of Europe, as well as the Rome Statute of the International Criminal Court of 1998 as referred
to in Article 8 of this Agreement, and closer cooperation with Eurojust ”

71
Remedies (Title IV, Chapter 2), technical Barriers to Trade (Title IV, Chapter 3), sanitary and
phytosanitary measures, (Title IV, Chapter 4), customs and trade facilitation (Title IV, Chapter 5),
establishment, trade in services, and electronic commerce (Title IV, Chapter 6), public
procurement (Title IV, Chapter 8), intellectual property (Title IV, Chapter 9), competition (Title
IV, Chapter 10), and energy (Title IV, Chapter 11), among other measures.
With regards to to energy cooperation , according to Article 337(1) the European Union
and Ukraine are to intensify and continue their energy cooperation, aiming to increase energy
security, sustainability and competitiveness, including energy sector approximation.
As to the matter of financial cooperation, according to Article 453 Ukraine is to receive
EU funding, with the aim of achieving the Association Agreement’s objectives.
Finally, in the area of the institutional arrangements created by the Agreement, Article
460(1) states that the summit level shall be the highest level with regards to both political and
policy dialogue, which are to be held once every year. These are to provide guidance for the
Association Agreement and to provide a forum for the discussion for various issues of mutual
interest.
As has been seen from the above, this is an agreement which goes beyond anything that
had been seen previously in terms of legal instruments that existed between the European Union
and Ukraine, and also between the former and the Russian Federation. This can be said to mark a
major milestone in both the history of the EU-Ukraine relations, but also in relations between the
European Union and third countries in general which are objects of the EU’s external relations
policy, being an agreement which seeks to strongly integrate the signatory third country with the
European Union, while at the same time not promising that country an explicit membership
perspective. The following comparative table has been created in order to better emphasise various
salient features of the Partnership and Cooperation Agreements and the Association Agreement
examined here, thus illustrating certain differences between the nature of the EU’s relationship
with both Russia and Ukraine:

72
 Similarities and differences between the PCAs and the Association Agreement

EU – RUSSIA EU – UKRAINE
PCA 1994 PCA 1998 Association Agreement (AA)
2014
it establishes a political it establishes a political political dialogue is to be “further
dialogue dialogue developed and strengthened” (it
also extends to areas of foreign and
security policy)
though a stated aim was the instead of creating a free it establishes a Deep and
eventual creation of a free trade area (despite state Comprehensive Free Trade Area
trade area between the two intention as this being an (the establishment between the
entities, in reality it was rather eventual aim) the primary parties of a free trade area over a
a declaration of an intention focus was the facilitation of period of 10 years)
with the most important trade by Ukraine’s adoption
economic aim being Russia’s of WTO norms and
future membership of the standards and also granted
World Trade Organisation, most-favoured-nation status
having been granted most-
favoured-nation status
approximation of legislation: approximation of legislation: approximation of legislation:
- it covers quite a broad - it covers quite a broad - it covers an even broader area
area of economic law area of economic law of economic law (beyond those
(company law, banking (company law, banking covered by the PCA it also
law, taxation etc.) law, taxation etc.) extends to areas like
- but there is no formal - but there is no formal competition law)
legal obligation to legal obligation to - progressive approximation of
approximate “(soft) approximate “(soft) Ukraine’s legislation to that of
commitment” commitment” the Union (more than a soft
commitment)
- approximation also extends to
non economic areas like justice
and judicial affairs
no EU membership no EU membership though not granting an explicit
perspective perspective membership perspective, the AA
still aims at the promotion of a
gradual rapproachement between
Ukraine and the European Union,
leading to Ukraine’s eventual
integration into the European
Union’s Internal Market

73
3.3.2 Dutch ratification of the Association Agreement

It has been recounted that Ukraine’s signing of the Association Agreement with the European
Union was not without its dramatic aspects. The same can also be said to a certain point on the
side of the European Union, with the Agreement’s ultimate ratification by the European Union
was not without its problematic aspects. In particular, the case of the Netherland’s ratification was
particularly difficult. The ultimate coming into force of the Association Agreement experienced
an obstacle due to a citizen initiated referendum that was organized in the Netherlands during the
course of 2016.363 The referendum question that was asked of Dutch citizens was whether or not
they were in favour or against the act that was to approve the European Union-Ukraine Association
Agreement. As to actual participation, 32.2 percent of eligible citizens voted, with the threshold
being 30 percent, and from this number 61.1 percent voted against the Association Agreement’s
ratification. 364 It was said that this result brought about “unprecedented situation” where there was
a fear that an EU agreement may not have been ratified due to a non-binding referendum in one of
the Union’s Member States.365 As to the underlying causes of the referendum, it is believed that
beyond opposition to the Association Agreement itself, a major motivating factor was a more
general feeling of Euroscepticism, 366 and that the referendum acted as a kind of test of public views
with regards to the Europen Union itself. 367 In fact, the opinion was expressed by certain sponsors
of the referendum that Ukraine itself was not of importance to them, but rather to express
opposition to the European Union.368
As mentioned in the introduction, neofunctionalism puts forward the concept of a kind of
“backlash” which can occur as a reaction to the integration process. The citizen-sponsored

363
NIJEBOER, Arjen: The Dutch Consultative Referendum Law: An Overview, Meer Democratie,
https://www.meerdemocratie.nl/dutch-consultative-referendum-law-overview (Accessed 2017.12.01)
364
KROET, Cynthia (2016): Dutch reject EU-Ukraine deal, Politico, 4 June 2016, http://www.politico.eu/article/low-
turnout-as-dutch-reject-eu-ukraine-deal/ (Accessed 2017.11.15)
365
VAN DER LOO, Guillaume: The Dutch Referendum on the EU-Ukraine Association Agreement: Legal options
for navigating a tricky and awkward situation. Centre for European Policy Studies Commentary, 8 April 2016,
https://www.ceps.eu/ceps-publications/dutch-referendum-eu-ukraine-association-agreement-legal-options-
navigating-tricky-and/ (Accessed 2018.01.04)
366
The Guardian (2016): Dutch referendum voters overwhelmingly reject closer EU links to Ukraine, 7 April 2016,
https://www.theguardian.com/world/2016/apr/06/dutch-voters-reject-closer-eu-links-to-ukraine-in-referendum
(Accessed 2019.02.17)
367
BBC News (2016): Netherlands rejects EU-Ukraine partnership deal, 7 April 2016,
https://www.bbc.com/news/world-europe-35976086 (Accessed 2019.02.17)
368
DE JONG, Sijbren (2016): Why the Dutch referendum on Ukraine is a joke, Euobserver, 4 April 2016,
https://euobserver.com/opinion/132908 (Accessed 2019.02.17)

74
referendum held in the Netherlands in 2016, which was organized as a response to the Dutch
government’s then impending vote to ratify the Association Agreement between the European
Union and Ukraine. As already mentioned, this development was strongly linked to a sense of
Euroscepticism, and it could also arguably be said, though the event took place in the Netherlands,
that no doubt this can be seen as part of similar broader feelings across the European Union, which
also manifested in the vote for the United Kingdom to leave the European Union. This can then be
described in the context of the postfunctional concept of “backlash” as a result of the process of
European integration, in this case in relation to the intensification of ties between the EU and a
third country, that is, Ukraine. This example shows how the internal domestic political climate of
certain individual Member States, and negative responses to the deepening of integration, may
through the utilization of certain political processes result in the impediment of European Union
external relation policy and the goals that it is pursuing with certain third countries. The response
of a significant proportion of the Dutch electorate to the prospect of their own government’s
ratification of the Association Agreement between the European Union and Ukraine can be seen
within the context of this broader conceptual framework. As we saw, the Association Agreement
was seen by many Dutch citizens through the prism of their broader dissatisfaction with the
European Union, its policy course and integration processes.
As a result of the referendum, the European Council Conclusions on Ukraine came into
being on the 15 December 2016, aiming to ease any issues and misapprehensions that Dutch voters
may have had in relation to the Association Agreement.369 The Conclusions state that the
ratification of the Association Agreement is a crucial objective for the European Union, as the
purpose of such agreements is to provide support to partner states in their attempt to become stable
and prosperous democracies, and also acts a reflection of the importance that the EU places on the
regional context, in both a strategic and geopolitical sense. 370 Yet is also states that after having
taken careful notice of the Dutch referendum’s outcome, it is necessary to address these
concerns.371

369
European Council (2016): European Council Conclusions on Ukraine, Brussels, 15 December 2016,
https://www.consilium.europa.eu/media/24151/15-euco-conclusions-ukraine.pdf (Accessed 2017.11.15) 1;
BACZYNSKA, Gabriela - BARTUNEK, Robert-Jan (2016): EU agrees Dutch demands on Ukraine deal to avoid
’present for Russia’, Reuters,15 December 2016, https://www.reuters.com/article/us-ukraine-crisis-eu-rutte-
idUSKBN14416I (Accessed 2019.02.17)
370
European Council (2016): European Council Conclusions on Ukraine, i.m.
371
Ibid.

75
 Consequently, the Conclusions says that though the Association Agreement aims to
“establish a close and lasting relationship” between the European Union and Ukraine, it does not
give Ukraine the status of a candidate country for membership of the EU, nor does it mean a
commitment to giving Ukraine candidate status at a point in the future.372 Additionally, the
Agreement contains no obligation for the European Union or its various Member States to provide
Ukraine with any collective security guarantees, or with other kinds of military assistance or aid.373
Furthermore, it affirms that the Association Agreement does not give Ukrainians the right to work
and reside freely within the European Union, nor does it confer the right to EU citizens to do the
same with regards to Ukraine.374 Also, it is affirmed that the Association Agreement does not
influence Member States’ ability to determine the number of Ukainian citizens to be admitted into
their countries seeking employment.375 The Conclusions also say that Member States are not
required to provide Ukraine with additional financial support, nor does it alter the right of the
Member States to determine amount of nature of any bilateral financial support.376
Subsequently, the Dutch House of Representatives voted to ratify the Agreement in
February 2017, followed by the Netherlands Senate on May 30,377 with the law being published
officially on June 14.378 Subsequently, the Council of the European Union ratified the Association
Agreement on July 11,379 and on September 1 it came into full effect.380
The above events illustrate the way in which certain European Union Member States and
their internal political situation may obstruct certain third countries from integrating into the
European Union, in this case, in terms of being an associate country. However, it must be admitted
that the Dutch referendum is also illustrative of problems that Ukraine may encounter in terms of

372
Ibid, Annex, A, 3.
373
Ibid, Annex, B, 4.
374
Ibid, Annex, C, 4.
375
Ibid.
376
Ibid, Annex, D, 4.
377
The Ukrainian Weekly (2017): Dutch Senate backs European Union-Ukraine Association Agreement, June 2 2017,
http://www.ukrweekly.com/uwwp/dutch-senate-backs-european-union-ukraine-association-agreement/ (Accessed
2017.11.15)
378
Ukrinform (2017): EU-Ukraine Association: Netherlands fully completes ratification of agreement, 15 June 2017,
https://www.ukrinform.net/rubric-politics/2248195-euukraine-association-netherlands-fully-completes-ratification-
of-agreement.html, (Accessed 2017.11.15)
379
European Council/Council of the European Union (2017): Ukraine: Council adopts EU-Ukraine association
agreement,Press Release,11/07/2017, http://www.consilium.europa.eu/en/press/press-releases/2017/07/11-ukraine-
association-agreement/ (Accessed 2017.11.11)
380
European Commission (2017): EU-Ukraine Association Agreement fully enters into force, Press Release,1
September 2017, http://europa.eu/rapid/press-release_IP-17-3045_en.htm, (Accessed 2017.11.11)

76
its desire to one day attain full membership of the European Union. As mentioned above, the
Conclusions of the European Council explicitly state that the Association Agreement does not
mean ultimately a European Union membership perspective. However, despite this, it has
continued to be consistently affirmed that becoming a European Union Member State is a strategic
goal of Ukraine. 381 The then Ukrainian President Peter Poroshenko had said that he sees the
Association Agreement signed with the European Union, despite the fact that it has been affirmed
that it does not affirm a membership perspective, as “a roadmap for further fundamental changes
that will bring Ukraine closer to the Copenhagen criteria for membership in the most prestigious
union in the world.”382

3.3.3 Visa liberalisation in relation to both Ukraine and Russia

An example of the way in which third countries may intensify and deepen their relations with the
European Union is through the easing of visa requirements for citizens of each other’s respective
countries. According to Article 77(2) of the Treaty on the Functioning of the European Union, the
European Union is to adopt a common policy with regards to visa and other types of short-stay
residence permits. 383 What follows is a survey of the European Union’s visa regulations with
Ukraine and Russia, which illustrates well the level and degree of integration attained respectively
between them. An important incentive for Ukraine to undertake its various reforms as part of its
European integration process was the goal of eventually attaining the right of travelling visa-free
to the territory of the European Union. 384

381
Interfax-Ukraine (2018): Poroshenko: Ukraine’s membership in EU and NATO not viable in 2018, but will happen
eventually. Kyiv Post, 6 January 2018, https://www.kyivpost.com/ukraine-politics/poroshenko-ukraines-
membership-eu-nato-not-viable-2018-will-happen-eventually.html, (Accessed 2018.07.07)
382
Ibid. Furthermore, he has stated that “During the Eastern Partnership Summit, I presented the outlines for further
intermediate steps: an association with the Schengen zone, accession to the EU Customs Union, the EU Energy Union
and the Single Digital Market. The sectoral integration will actually turn the country’s eastern borders into the EU
borders before we de jure join the EU”. See Ibid.
383
Furthermore, Regulation 539/2001, Regulation 1683/95 and Regulation 810/2009 act as the legal basis of the EU’s
visa policy. See VAN ELSUWEGE, Peter (ed.), EU-Russia Visa Facilitation and Liberalization: State of Play and
Prospects for the Future, EU-Russia Civil Society Forum, September 2013, 13,
https://biblio.ugent.be/publication/4157305/file/4157306.pdf (Accessed 2019.02.17)
384
SASSE, Gwendolyn (2017): Ukrainians Travel Visa Free. Carnegie Europe, June 26 2017,
http://carnegieeurope.eu/strategiceurope/71354, (Accessed 2017.10.26). Article 19 of the Association Agreement
between the European Union and Ukraine states that, “The Parties shall take gradual steps towards a visa-free regime
in due course, provided that the conditions for well-managed and secure mobility, set out in the two-phase Action
Plan on Visa Liberalization presented at the EU-Ukraine Summit of 22 November 2010, are in place.”

77
 As to the background of this visa liberalisation, it must be said that Ukraine permitted EU
citizens to cross its borders from 1 May 2005 without needing to obtain a visa to do so. 385 Later,
in October 2008 The EU-Ukraine Visa Liberalisation Dialogue was created,386 its aim being that
Ukrainian citizens would eventually be able to travel visa-free to the European Union.387 In 2010
the Visa Liberalisation Action Plan was adopted.388 Progress reports were the mechanism by which
the European Commission monitored the implementation of the Action Plan, in addition to
meetings being held between Ukraine and the European Commission. 389 As a consequence of the
positive nature of the sixth progress report, in December 2015 the European Commission wished
to propose bringing to an end the requirement for visas for those Ukrainians who owned biometric
passports.390 The European Commission proposed in April 2016 that the Council of the European
Union and the European Parliament grant visa-free travel for Ukrainians travelling to the Schengen
zone,391 which officially took place on June 11 2017.392 Ukrainians can now travel (excepting the
UK and Ireland) with biometric passports for up to 90 days to all the European Union’s Member
States.393
It is worth comparing Ukraine’s visa-free relationship with the European Union in contrast
and comparison with that which exists and has been proposed with regards to the Russian
Federation. It must be said that during a certain period of time this was an idea which enjoyed a
certain amount of broad political support from within both the European Union and Russia.394
Furthermore, at times Russia has even considered the creation of a visa-free travel regime with the

385
EU-Ukraine Visa Dialogue: Action Plan on Visa Liberalisation, www.kmu.gov.ua/document/244813932/EU-
Ukraine-Action-Plan.pdf, (Accessed 2017.10.26)
386
European Commission: Visa Liberalisation with Moldova, Ukraine and Georgia, Migration and Home Affairs,
https://ec.europa.eu/home-affairs/what-we-do/policies/international-affairs/eastern-partnership/visa-liberalisation-
moldova-ukraine-and-georgia_en (Accessed 2019.02.17)
387
Ibid.
388
Ibid.
389
European Commission: Visa Liberalisation with Moldova, Ukraine and Georgia, i.m.
390
European Commission (2015): Commission Progress Report: Ukraine meets criteria for visa liberalisation, Press
Release, 18 December 2015, http://europa.eu/rapid/press-release_IP-15-6367_en.htm, (Accessed 2017.10.26)
391
European Commission (2017): European Commission proposes visa-free travel for citizens of Ukraine, Press
Release, 20 April 2016, europa.eu/rapid/press-release_IP-16-1490_en.pdf, (Accessed 2017.10.26)
392
European Union External Action (2017): Visa-Free Travel for Ukrainians comes into force, 11 June 2017,
https://eeas.europa.eu/headquarters/headquarters-homepage_en/27990/V wisa
free%20travel%20for%20Ukrainians%20comes%20into%20force (Accessed 2019.02.14).
393
European Commission (2015): i.m.
394
European Voice (2010): Visa-free travel between Russia and the EU? Yes, but no yet, Politico, 8 September 2010
(Updated 23 May 2014), https://www.politico.eu/article/visa-free-travel-between-russia-and-the-eu-yes-but-not-yet/
(Accessed 2019.02.11)

78
European Union a priority.395 For example, according to the Concept of the Foreign Policy of the
Russian Federation, the abolition of short-term visas between the European Union and Russia
possesses a special importance, and that this development would “greatly facilitate genuine
Russia-EU integration”, with the visa regime in place being a barrier to this. 396 As to the European
Union, though expressing support for the idea itself, there have been concerns with regards to such
areas as crime and illegal immigration.397
In May 2003 during the EU-Russia Summit the two parties examined the possibility of
eventually establishing a visa-free travel regime between them and in the May 2005 Road Map for
the Common Space of Freedom, Security and Justice they committed to pursuing the dialogue
relating to this topic.398 Later, in 2007 the European Union and Russia signed the Agreement
between the European Community and the Russian Federation on the facilitation of the issuance
of visas to the citizens of the European Union and the Russian Federation. 399 According to Article
1 of the Agreement, “The purpose of this Agreement is to facilitate, on the basis of reciprocity, the
issuance of visas for an intended stay of no more than 90 days per period of 180 days to the citizens
of the European Union and the Russian Federation”. The Preamble of the Agreement
acknowledges that enabling people-to-people contacts is a necessary element for the strengthening
of ties in various areas, including in such fields as economic relations, and humanitarian, scientific
and cultural issues.
In December 2011 the European Union actually agreed to the commencing of the
negotiating process which would have had as its ultimate aim Russian citizens being able to travel
to the territory of the European Union visa-free in the form of the Common Steps.400 According to

395
Sputnik (2013): Russia Pushing for EU Visa-Free Travel Deal in January, 7 December 2013,
https://sputniknews.com/russia/20131207185311112-Russia-Pushing-for-EU-Visa-Free-Travel-Deal-in-January/
(Accessed 2019.02.11)
396
The Ministry of Foreign Affairs of the Russian Federation (2013): Concept of the Foreign Policy of the Russian
Federation, paragraph 58, 18 February 2013, http://www.mid.ru/en/foreign_policy/official_documents/-
/asset_publisher/CptICkB6BZ29/content/id/122186 (Accessed 2019.02.11).
397
Sputnik (2013): i.m.
398
Common Steps Towards Short-Term Travel of Russian and EU Citizens (Russia-EU Visa Dialogue):
https://ec.europa.eu/home-affairs/sites/homeaffairs/files/what-we-do/policies/international-
affairs/russia/docs/common_steps_towards_visa_free_short_term_travel_en.pdf (Accessed 2019.02.13)
399
OJ L 129, 17.5.2007, https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:22007A0517(01) (Accessed
2019.02.11)
400
VOGEL, Toby (2011): EU, Russia agrees steps towards visa-free travel, Politico, 15 December 2011 (Updated 23
May 2014), https://www.politico.eu/article/eu-russia-agree-steps-towards-visa-free-travel/ (Accessed 2019.02.11);
SCHMIDT-FELZMAN Anke (2014): Is the EU’s failed relationship with Russia the member states’ fault? L’Europe
en formation, No. 374, Winter 2014, 46, https://www.cairn.info/revue-l-europe-en-formation-2014-4-page-40.htm#
(Accessed 2019.02.17)

79
these, there is to be an implementation of measures with regards to document security and
biometrics; illegal migration, including readmission; public order, security and judicial
cooperation; and finally in the area of external relations. 401
Russia had harboured hopes that it could complete an agreement on visa-free travel with
the European Union before the beginning of the Sochi Winter Olympics in February 2014,
however this became apparent in January of the same year that this would not occur.402
Subsequently, a major obstacle which arose in relation to a realistic implementation of a visa-free
travel regime between the European Union and Russian Federation was events in Crimea and East
Ukraine and the former’s imposition of sanctions against the latter and the subsequent response
which ensued, as well as the suspension of negotiations in relation to the topic of a visa-free travel
regime being implemented.403
The differences in the visa travel regime between the European Union and both Ukraine
and Russia can be said to reflect the great difference between the two in relation to their
relationships. One reflects a relationship which can be said to be more integrated, which is
especially manifestated in Ukraine’s Association Agreement with the European Union, but it is
also evident in such developments as Ukraine’s new visa-free travel regime with the European
Union, which, as already been stated, contains both practical and symbolic elements. The situation
with regards to the European Union and Russia in this area can be said to somewhat reflect the
level of integration between the two and the present state of relations that exists between them at
the present moment.404
In summary, since gaining independence from the Soviet Union, Ukraine has, unlike the
Russian Federation, claimed a kind of deep integration with and membership of the European
Union as one of its major policy objectives. This process particularly intensified with the signing
of the Association Agreement with the European Union. As a result of this development, Ukraine’s

401
Common Steps Towards Short-Term Travel of Russia and EU Citizens, i.m., Blocks 1, 2, 3, 4.
402
MAKINEN, Sirke - SMITH, Hanna - FORSBERG, Tuomas (2016): ‘With a Little Help from my Friends: Russia’s
Modernisation and the Visa Regime with the European Union, Europe-Asia Studies, Vol. 68, No. 1, January 2016,
176, https://www.tandfonline.com/doi/pdf/10.1080/09668136.2015.1123223 (Accessed 2019.02.23)
403
TASS Russian News Agency (2019): Russia, EU are past worst phase in their relations, says Russian diplomat,
04 February 2019, http://tass.com/politics/1043216, (Accessed 2019.02.13)
404
However, it should be noted that in 2017 Russians placed the highest number of applications for Schengen visas.
See Schengen Visa Info (2018): Russia tops chart with most Schengen visa applications in 2017, 8 May 2018,
https://www.schengenvisainfo.com/news/russia-tops-chart-with-most-schengen-visa-applications-in-2017/
(Accessed 2019.02.13)

80
relationship with the European Union now differs dramatically from that of the latter’s relationship
with Russia, in that Russia’s PCA does not establish the same “special” and “privileged”
relationship with the European Union that Ukraine’s Association Agreement does. This reflects
the nature of the difference in the relations between the Russian Federation and the European
Union, as opposed to Ukraine’s, with the latter’s being focused on a deep and comprehensive
integration, even with a desire for eventual full membership.

3.3.4 The European Union-Ukraine Association Agreement as a model: The case of Brexit

As already mentioned, the Association Agreement signed between the European Union and
Ukraine is considered a pioneering legal instrument in the former’s dealings with third countries.
However, it is also worth noting that in fact the Agreement has been proposed as a model for
certain other situations as well. An interesting and some may say unexpected development relating
to the Association Agreement is the suggestion that it could act as a model for European Union-
United Kingdom relations after the latter ceases to be a Member State of the former. 405 In this case,
the Association Agreement signed between the European Union and Ukraine, which was originally
seen as an innovative legal instrument in the sense that it acted as a way to integrate, to a certain
extent, neighbouring states without a full membership perspective, now is seen as also acting as a
model for a specific state leaving the European Union. This curious development only increases
the importance of this agreement, acting as an example for states wishing to maintain intimate and
integrated relations with the European Union, while not achieving full member status.
The idea that the EU-Ukraine Association Agreement has relevance for the future
framework of relations between the EU and UK has been suggested during the course of the debate
and negotiations in the aftermath of the Brexit referendum. 406 The reason for this is that it is seen
as having the potential to both maintain close economic ties with the European Union, while at the
same time maintaining national sovereignty. 407 Additionally, it has been proposed that the benefits

405
OTT, Ursula F - GHAURI, Pervez N (2018): How a ‘Ukraine-plus’ Brexit deal could solve Theresa May’s
problems, The Conversation, 20 November 2018, https://theconversation.com/how-a-ukraine-plus-brexit-deal-could-
solve-theresa-mays-problems-107297 (Accessed 2019.02.11)
406
Ibid.
407
OPPENHEIM, Beth (2018): The Ukraine Model for Brexit: Is Dissociation Just Like Association?, Centre for
European Reform, 27 February 2018, https://www.cer.eu/insights/ukraine-model-brexit-dissociation-just-association,
(Accessed 2018.07.07)

81
to the UK of a similar agreement would bring about the end of the application of EU law in the
country; that it would end the principle of free movement of people from the EU to the UK; that it
would still allow the UK access to the EU’s single market; that it would provide the UK with the
ability to conclude trade agreements with other countries; and that the UK and EU would still be
able to work together in relation to such issues as defence and security. 408 For example, the
European Parliament passed a resolution stating that “whereas the UK and the EU will remain
close neighbours and will continue to have many interests in common; whereas such a close
relationship in the form of an association agreement between the EU and the UK could be
considered an appropriate framework for the future relationship by which these common interests
can be protected and promoted, including a new trade relationship” and that “whereas the
advantage of an association agreement for the future relationship is that it provides a flexible
framework allowing for varying degrees of cooperation across a wide variety of policy areas;
whereas that cooperation will require both parties to maintain high standards and their
international commitments in a number of policy areas”.409
On July 12 2018 the United Kingdom government published a White Paper which set out
plans for a kind of association agreement similar in style to the one signed between the European
Union and Ukraine.410 This would include being part of a “customs territory” with the European
Union, involving the participation in a single market for goods, while engaging with “ongoing
harmonisation” with the rules of the EU.411 However, this model of Brexit based on some kind of
Ukraine-style Association Agreement provoked negative reactions from certain quarters in the
United Kingdom, with the release of the White Paper proposing this measure triggering the
resignation of two cabinet ministers. 412 Furthermore, there are those that have criticised this idea,
saying that such agreements, with their emphasis upon approximation to the European Union’s

408
OTT - GHAURI (2018): i.m.
409
European Parliament (2018): Motion for a Resolution, 7.3.2018, European Parliament resolution on the framework
of the future EU-UK relationship (2018/2573(RSP)), http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-
%2F%2FEP%2F%2FTEXT%2BMOTION%2BB8-2018
0135%2B0%2BDOC%2BXML%2BV0%2F%2FEN&language=EN, (Accessed 2018.08.08)
410
FOX, Benjamin (2018): UK Brexit Paper backs Ukraine-style association pact. Euractiv, 12 July 2018,
https://www.euractiv.com/section/uk-europe/news/uk-brexit-paper-backs-ukraine-style-association-pact/,(Accessed
2018.08.08)
411
Ibid.
412
PARKER, George – PICKARD, Jim (2018): Theresa May unveils plans for softer Brexit. Financial Times, 12 July
2018, https://www.ft.com/content/702ac352-85bc-11e8-96dd-fa565ec55929, (Accessed 2018.08.08)

82
norms and regulations, goes against the very raison d'être of Brexit and its narrative, which was
to reclaim national sovereignty.413
At the present juncture, with regards to the United Kingdom’s negotiations with the
European Union as to what Brexit will actually look like in reality and practice, there is little clarity
due to various issues that have arisen. However, the fact that the Association Agreement was
proposed as a model for future relations, even if this does not actually transpire in the end, shows
its innovative nature and its potential utility in the area of the European Union’s external relations.

3.3.5 Case study: Ukraine’s Association Agreement with the European Union and its relations
with China

By the signing of the Association Agreement with the European Union in 2014, Ukraine
committed itself to deepening its integration with the European Union. As has been seen, this
involved both political and economic association, as well as creating a deep and comprehensive
free trade area. However, despite this clear and unambigious commitment to go down the path of
and pursue European Union integration, at the same time, Ukraine since attaining independent
statehood has also sought to expand its relations with various countries in its immediate region and
beyond. Such a course of action is natural for all countries, and has a particular relevance for those
states which inhabit the regions of Central and Eastern Europe, who find themselves in a crucial
geographical and geopolitical location, and Ukraine is no exception to this. This attempt at
pursuing a multivector policy while also being committed to European integration has manifested
itself in different ways since the time that Ukraine attained independent statehood, one of which
is the country’s pursuit of its relations with the People’s Republic of China, which also includes
cooperation in the broader context of China’s Belt and Road Initiative. 414 Ukraine has been

413
OPPENHEIM (2018): i.m.
414
The Belt and Road Initiative, also known as the One Road, One Belt Intiative, can be said to have been launched
with a speech that Chinese President Xi Jingping made at the Nazarbayev University in Astana, Kazakshtan, on
September 7 2013. At this event, President Xi said that “To forge closer economic ties, deepen cooperation and
expand development space in the Eurasian region, we should take an innovative approach and jointly build an
economic belt along the Silk Road,” Furthermore, President Xi stated that “This will be a great undertaking,
benefiting the people of all countries along the route. To turn this into a reality, we may start with work in
individual areas and link them up over time to cover the whole region.” See The State Council Information Office of
the People’s Republic of China (2017): President Xi’s statements on the Belt and Road Initiative, 17 April 2017,
http://www.scio.gov.cn/31773/35507/35520/Document/1548585/1548585.htm (Accessed 2019.04.07); WITTE,
Michelle: Xi Jinping Calls for Regional Cooperation Via New Silk Road, The Astana Times, 11 September 2013,

83
described as a desirable destination for Chinese investment due to its similar Association
Agreement and Deep and Comprehensive Free Trade Agreement with the European Union, having
the potential to act as a vital transit country to the European Union, being located at the crossroads
between East and West.415 This illustrates how states that seek to integrate with the European
Union as much as possible also may simultaneously engage and seek cooperation with non-EU
member states in pursuit of their national interests. It is true that Ukraine’s developing relationship
with China is just one example in which Ukraine’s Association Agreement with the European
Union can make it a particularly attractive partner for various third countries. However, it is
pertinent due to the fact that it very effectively illustrates the point, and furthermore, it is
appropriate due to the importance of China’s status in world affairs, something which will no doubt
only continue with the passing of time. What follows is a survey of Ukraine-China relations,
including certain key projects and plans that have been and are in the process of being worked on
and developed, illustrating the extent of such relations, and how Ukraine’s association with the
European Union has affected its own external relations.
With regards to the basic legal framework which exists between Ukraine and China, it can
be said that the modern relationship bgan on on December 27 1991 when the People’s Republic
of China recognized Ukraine’s independence, and diplomatic relations were established between
the two countries on 4 January 1992. 416 The legal basis of the Ukrainian-Chinese relationship
includes over 300 documents.417 One of these is the 1992 Economic Cooperation Agreement
between Ukraine and China, which regulates trade between the two countries. 418 Other key
documents relating to economic relations include the 1992 agreement on scientific and
technological cooperation and the 1993 agreement on encouragement and mutual protection of
investments.419 As things stand at the present time, China is Ukraine’s third largest trade partner,

https://astanatimes.com/2013/09/xi-jinping-calls-for-regional-cooperation-via-new-silk-road/, (Accessed
2019.04.07)
415
Xinhua (2017): Belt and Road Initiative holds vast development opportunities for Ukraine: First Vice PM, 10
October 2017, http://www.xinhuanet.com/english/2017-10/04/c_136658920.htm (Accessed 2019.02.17); MYKAL,
Olena (2016): Why China Is Interested in Ukraine, The Diplomat, 10 March 2016,
https://thediplomat.com/2016/03/why-china-is-interested-in-ukraine/ (Accessed 2019.02.17)
416
Embassy of Ukraine to the People’s Republic of China: Political relations between Ukraine and China,
http://china.mfa.gov.ua/en/ukraine-cn/diplomacy (Accessed 2019.02.17)
417
Embassy of Ukraine to the People’s Republic of China: Legal basis of Ukraine and China,
http://china.mfa.gov.ua/en/ukraine-cn/legal-acts (Accessed 2019.02.17)
418
Embassy of Ukraine to the People’s Republic of China: Trade and economic relations between Ukraine and China,
http://china.mfa.gov.ua/en/ukraine-cn/trade (Accessed 2019.02.17)
419
Embassy of Ukraine to the People’s Republic of China: Legal basis of Ukraine and China, i.m.

84
after the European Union and Russia and in terms of trade between the two countries, in 2017 it
rose by 18 percent, reaching $7.68 billion. 420 According to the Export Strategy of Ukraine, China
is ranked second place in the TOP-20 list of promising markets for Ukrainian exports.421
Additionally, in more recent times other documents have been signed that establish the
present framework of Ukraine-China relations. 422 These include the Joint Declaration on the
Establishment and Development of Strategic Partnership Relations between Ukraine and the
People’s Republic of China, signed in June 2011; the Treaty on Friendship and Cooperation
between Ukraine and the People’s Republic of China, the Joint Declaration to further deepen the
strategic partnership, and the Program of the development of strategic partnership between Ukraine
and China in 2014-2018, all three of which were signed in 2013. 423
An important development in the relationship was the establishment of the China-Ukraine
Intergovernmental Commission on Cooperation, which was brought into being in 2011, the aim of
which is to strengthen bilateral relations between the two countries. 424 It has become a central
mechanism in planning and coordinating cooperation between Ukraine and China. 425 On
December 5 2017 China and Ukraine during the third session of the China-Ukraine
Intergovernmental Commission on Cooperation signed an action plan which aims to build the Silk
Road Economic Belt and the 21 st-century Maritime Silk Road.426 On the same date, Ma Kai, vice-
premier of China, announced that joint projects shall be undertaken by Ukraine and China that
shall total $7 billion.427 These include, among others, the plan for Chinese companies to build a
new metro line in the capital Kyiv worth $2 billion and a $500 million loan to be provided by the
China Civil Engineering Construction Corporation in order to provide housing mortgages at an

420
Kyiv Post (2018): China becomes a key trade partner, investor in Ukraine, 12 January 2018,
https://www.kyivpost.com/business/china-becomes-key-trade-partner-investor-ukraine.html (Accessed 2019.02.17)
421
Ukrininform (2018): Trade turnover between Ukraine and China reached $7.7 bln in 2017 – Kubiv, 7 August 2018,
https://www.ukrinform.net/rubric-economy/2513080-trade-turnover-between-ukraine-and-china-reached-77-bln-in-
2017-kubiv.html (Accessed 2019.02.17)
422
Embassy of Ukraine to the People’s Republic of China: Political relations between Ukraine and China, i.m.
423
Embassy of Ukraine to the People’s Republic of China: Legal basis of Ukraine and China, i.m.
424
UNIAN Information Agency (2011): Ukraine and China created Intergovernmental commission on cooperation,
20 April 2011, https://www.unian.info/politics/486088-ukraine-and-china-created-intergovernmental-commission-
on-cooperation.html (Accessed 2019.02.17)
425
Xinhua (2017): China, Ukraine sign slew of agreements, including on Belt and Road, 5 December 2017,
http://www.xinhuanet.com/english/2017-12/05/c_136802960.htm (Accessed 2019.02.17)
426
Ibid.
427
Kyiv Post (2018): China becomes a key trade partner, investor in Ukraine, 12 January 2018,
https://www.kyivpost.com/business/china-becomes-key-trade-partner-investor-ukraine.html (Accessed 2019.02.17)

85
affordable level, and the same corporation also plans to construct a passenger railway that would
connect Kyiv with Boryspil International Airport, a project worth $400 million. 428
Ukraine’s importance to the broader Belt and Road Initiative is linked to its potential as a
vital transit country, being located at the crossroads between East and West.429 This is magnified
by Ukraine’s Deep and Comprehensive Free Trade agreement with the European Union. 430 Vice -
Premier Ma Kai has stated that in the context of the Belt and Road Initiative, China consider’s
Ukraine “as one of the logisitics and industrial hubs on the way to the European Union”.431 The
deputy prime minister of Ukraine, Gennady Zubko, also said that "The Silk Road is an investment
artery that connects Central Asia, the largest producer of goods, with the rest of the world. Ukraine
is the first European country on this path, and we must fully take the advantage of this position".432
For example, Ukraine’s geographic proximity to the European Union involves the possibility of
attracting businesses from China interested in investing in the manufacturing sector, with the goal
of ultimately exporting to the European Union. 433 Ukrainian leaders have also seen the Belt and
Road Initiative as an opportunity for Ukraine to attract new investments, enter new markets and
develop the country’s infrastructure.434 It has been estimated that the 21st Century Silk Road from
China to Ukraine could measure 5, 471 kilometers, with one of its lines potentially going from
China though to Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and then on to the Black Sea,
finally reaching Ukraine’s Chernomorsk port.435 It is worth noting that the China Harbor
Engineering Company won the tender for a dredging project at the Chernomorsk port, signing an
agreement for the implementation of this project on April 6 2018.436

428
Ibid.
429
Xinhua (2017): Belt and Road Initiative holds vast development opportunities for Ukraine, i.m.
430
MYKAL (2016): i.m.
431
Interfax-Ukraine (2017): Ukraine, China implementing some joint projects for $7 bln, 5 December 2017,
http://en.interfax.com.ua/news/economic/467312.html (Accessed 2019.02.17)
432
Xinhua (2016): Spotlight: Ukraine seeks to join „16+1” mechanism for participation in China’s Silk Road initiative,
8 November 2016, http://www.xinhuanet.com/english/2016-11/08/c_135812518.htm (Accessed 2019.02.17)
433
MYKAL (2016): i.m.
434
Xinhua (2017): Belt and Road Initiative holds vast development opportunities for Ukraine, i.m.
435
BUZAROV, Andrey (2018): Ukraine and China: Seeking Economic Opportunity within a Framework of Risk,
Wilson Center, 21 February 2018, https://www.wilsoncenter.org/blog-post/ukraine-and-china-seeking-economic-
opportunity-within-framework-risk (Accessed 2019.02.17)
436
Xinhua (2018): Chinese company wins tender to upgrade Ukraine’s Black Sea port, 14 March 2018,
http://www.xinhuanet.com/english/2018-03/14/c_137039281.htm(Accessed 2019.02.17); Xinhua (2018): Chinese
company signs deal to upgrade Ukraine’s Black Sea port, 7 April 2018, http://www.xinhuanet.com/english/2018-
04/07/c_137092619.htm, (Accessed 2019.02.17)

86
 Ukraine doubled its grain exports to China in the 2017-2018 marketing year, reaching over
one million tons.437 Ukraine has now become China’s leading supplier of corn, in 2017 having
overtaken the United States.438 Ukraine has also sought to cooperate with neighbouring countries
within the context of the Belt and Road Initiative. One example is its willingness to join the 16 +
1 platform, which acts as a forum to forge closer relations between China and various Central and
Eastern European States439 First Vice Speaker of the Ukrainian parliament, Iryna Gerashchenko,
stated that "It is very important for Ukraine to join the "16+1" format and become a full member
of the Silk Road project".440 Another example of the possibility for cooperation with countries in
its region within the framework of the Belt and Road Initiative relates to Georgia, which has also
signed an Association Agreement with the European Union. 441 The two countries have expressed
the view that they should jointly utilize their geographic and transport potential in order to make
themselves vital links along the Belt and Road.442 It has been said that the fact that Ukraine has a
functioning free trade regime with the European Union and that Georgia signed a free trade deal
with China in May 2017 aids in achieving such a goal. 443 It is also noteworthy that in March 2018
during the 11th Europe-Ukraine Forum in Poland one of the major topics discussed related to the
Belt and Road Initiative. 444 At this event the Polish Infrastructure Minister Andrzej Adamczyk
discussed the possibility of extending Poland’s A4 highway to Ukraine, a highway which is also
of importance to Belarus and Central Asian countries as well. 445
As to any possible deepening of the trade relationship between Ukraine and China, it is
interesting to consider the actions of two other countries which have similar Association
Agreements with the European Union, which are Georgia and Moldova. As has already been
stated, the former actually signed a free trade agreement with China in May 2017, coming into

437
Unian Information Agency (2018): Ukraine doubles grain exports to China, 20 July 2018,
https://www.kyivpost.com/ukraine-politics/unian-ukraine-doubles-grain-exports-to-china.html, Kyiv Post, (Accessed
2019.02.17)
438
Stratfor (2018): China’s Belt and Road Initiative Finds Shaky Ground in Eastern Europe, 9 August 2018,
https://worldview.stratfor.com/article/chinas-belt-and-road-initiative-finds-shaky-ground-eastern-europe-0
(Accessed 2019.02.17)
439
Xinhua (2016): i.m.
440
Ibid.
441
Xinhua (2017): Ukraine, Georgia to promote cooperation under Belt-Road Initiative, 21 November 2017,
Xinhuanet, http://www.xinhuanet.com/english/2017-11/27/c_136783248.htm (Accessed 2019.02.17)
442
Ibid.
443
Ibid.
444
Xinhua (2018): Belt and Road Initiative discussed during Europe-Ukraine Forum, 14 March 2018,
http://www.xinhuanet.com/english/2018-03/14/c_137039309.htm (Accessed 2019.02.17)
445
Ibid.

87
effect on 1 January 2018.446 As for Moldova, on 28 December 2017 it signed a Memorandum of
Understanding on Launching China-Moldova Free Trade Agreement Negotiations with China.447
It has been supposed that Moldova, being located in Eastern Europe, by possibly signing a free
trade agreement with China, could act as a kind of example for the broader region that the country
inhabits. 448 It is interesting to consider whether Ukraine itself may decide to also sign such a deal
with China in the future, similarly to Georgia and perhaps also Moldova. Indeed, in November
2018 officials from Ukraine and China commenced preliminary discussions on a possible free
trade agreement between the two countries. 449

***

It can be said that Ukraine’s desire to deepen its relations with China are a manifestation of the
country’s multivector foreign policy which it has on the whole pursued since attaining its
independence. This is a policy which has been committed to European integration, which can be
seen in particular by the country’s signing the Association Agreement with the European Union,
while at the same time attempting to cooperate and deepen relations with other countries and
regions as well. Indeed, as has been seen, Ukraine’s association with the European Union is seen
favourably from the perspective of China. Due to its important geographical and geopolitical
location, which includes its now close Association with it can be assumed that Ukraine and China
will attempt to deepen and expand their relations.

446
KARELIDZE Tamara (2018): China-Georgia FTA Takes Effect, Emerging Europe, 3 January 2018,
https://emerging-europe.com/news/china-georgia-fta-takes-effect/, (Accessed 2018.10.03)
447
Ministry of Commerce People’s Republic of China (2017): China and Moldova Officially Launch the FTA
Negotiations, 29 December 2017,
http://english.mofcom.gov.cn/article/newsrelease/significantnews/201801/20180102694506.shtml (Accessed
2018.10.03)
448
ZHEN Liu (2017): Can a China-Moldova free-trade deal give Beijing a foothold in eastern Europe?, South China
Morning Post, 29 December 2017, https://www.scmp.com/news/china/diplomacy-defence/article/2126179/can-
china-moldova-free-trade-deal-give-beijing-foothold (Accessed 2018.10.03).
449
LAURENSON, Jack (2018): In Beijing, Ukraine and China begin talks on free trade agreement, Kyiv Post, 8
November 2018, https://www.kyivpost.com/business/in-beijing-ukraine-and-china-begin-talks-on-free-trade-
agreement.html (Accessed 2019.02.04)

88
3.4 Ukraine and the Legal Approximation to the Energy Acquis of the European Union and
New Developments with regards to Gas Importation

As has already been seen, from the time that Ukraine gained its independence from the Soviet
Union in 1991 Ukraine has, in general and to varying degrees, pursued a policy of European
integration. It has also been seen that this is an orientation which has strengthened and intensified
since the Euromaidan Revolution of 2014 which saw the coming to power of a unambigiously pro-
Western government intent on European and Euroatlantic integration, which has led to policy
changes and reforms in various areas, he greatest manifestation of this being the signing of the
Association Agreement with the European Union. There are other examples of this as well, one of
which relates to the area of energy. Here there shall be an examination of Ukraine’s legal
obligations arising from its membership of the Energy Community, specifically the need to
approximate to the EU’s energy acquis, as well as the degree to which these have been successfully
fulfilled. As shall be seen, the Energy Community is a major mechanism of European Union
external governance, able to spread its energy acquis beyond its own borders to neighbouring third
countries. Additionally, there shall also be a survey of certain changes the country has made with
regards to its gas importation practices in recent times, which have come about as a result of the
quest to seek and utilize alternative sources of gas. In relation to Ukraine’s attempts to approximate
to EU norms and standards, it shall be shown that there have been successes, though in certain
particulars it has also been described as being somewhat “fragmented”.450 As to Ukraine’s gas
importation regime, there have been real and definite changes, though this development has not
been without complications and problematic aspects, in particular relating to questions of law with
regards to reverse flows of gas. It shall be seen that, in general, Ukraine’s approach to the European
Union’s energy acquis is approximation, attempting to align itself with its norms and standards in
this area, which is its legal obligation to do. It shows that unlike the case of European Union-
Russia energy relations, Ukraine has fully accepted the idea that it is to import the norms and
standards of the European Union, and has attempted to change its legislation according.

450
POPOVYCH, Maksym: (2016): - Energy regulator in Ukraine is another fight for independence, Kyiv Post, 22
May 2016, http://www.kyivpost.com/article/opinion/op-ed/max-popovych-energy-regulator-in-ukraine-is-another-
fight-for-independence-414294.html, (Accessed: 2016.09.01)

89
3.4.1 The Energy Community

Beyond the Member States of the European Union, the norms and regulations which compromise
the energy acquis have also become binding upon third party states who have become signatories
to the Energy Community Treaty. Thus, these countries are bound to implement the EU’s energy
acquis, among which is Ukraine. The major mechanism which the European Union has in order to
extend its energy regime beyond its borders is the Energy Community, with the European
Commission itself having stated that “The Energy Community Treaty is the reference point for the
majority of the EU’s neighbours willing to be a part of the European energy system”. 451 The two
essential driving forces behind its establishment are the energy security of the European Union
and the desire to export its norms and rules relating to energy to neighbouring countries. 452 In the
words of the Energy Community’s Secretariat, “The Energy Community’s mission is to extend the
EU internal energy market to South East Europe and beyond on the basis of a legally binding
framework. The principal instrument to achieve this aim is the adoption of the EU’s legislation,
the so-called “acquis communautaire”, in energy and related areas.”453
As to the establishment of a common European energy policy, it was not until the late
1980s that real, substantial progress began to be made in this area.454 This is somewhat surprising
if we consider the vital status of energy to modern economies, the consequences of the increases
of the price of oil in the 1970s, the existence of the Euratom and ESCS Treaties, and the fact that
the Commission itself had stated for years that the integration of the energy market would be highly
beneficial and lead to large savings. 455 The major obstacle to development with regards to this
issue were the Member States themselves, who, due to their differing circumstances and
percularities, tended to prefer national solutions. 456

451
Communication from the Commission (2011): On security of energy supply and international cooperation – „The
EU Energy Policy: Engaging with Partners beyond Our Borders”, 7 September 2011, COM (2011), 6, https://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0539:FIN:EN:PDF (Accessed 2018.09.16)
452
TALUS, Kim (2013): EU Energy Law and Policy: A Critical Account, Oxford, Oxford University Press, 245.
453
Energy Community: What We Do, https://www.energy-
community.org/portal/page/portal/ENC_HOME/ENERGY_COMMUNITY/What_we_do (Accessed 2018.09.16)
454
NUGENT, Neil (2010): The Government and Politics of The European Union, 7th edition, Basingstoke, Palgrave
Macmillan, 343.
455
Ibid.
456
Ibid.

90
 One major aim of the development of a coherent, independent and united European energy
policy is in order to alleviate pressures arising due to overdependence upon any particular
particular energy producer.457 The EU relies on non-Member States to meet almost half of its
energy needs, and in the case of oil the level of dependence reaches as high as 70 per cent.458
Specifically, it has been Eastern and Central European states which have been particularly
concerned with this matter, and the 2004 and 2007 enlargements had the impact of making this
issue of even more vital importance. 459 In addition, the repeated interruptions in the delivery of
Russian energy along the Ukrainian and Belarussian transit routes (in particular in 2006 and 2009),
as well as the present conflict taking place in Ukraine, have given a strong encouragement to the
European Union in the direction of actively seeking for various alternative sources of energy. 460
As to the background and basic nature of the Energy Community, it came into force on 1
July 2006, initially being limited to the European Community and the countries of the West
Balkans, the signatories being Albania, Bulgaria, Bosnia-Herzegovina, Croatia, the Former
Yugoslav Republic of Macedonia (now the Republic of North Macedonia), Montenegro, Romania,
Serbia, and Kosovo.461 Its main underlying thrust was that the EU would strengthen its supply
security while the Balkan states involved would experience the benefits of a coherent policy in the
energy area.462 The Energy Community Treaty explicitly seeks to emulate the European Coal and
Steel Community, for in the same way that the latter arose in a region that had just emerged from
war and conflict, so the Energy Community is the first time that all the West Balkan states signed
a legally binding treaty, which arose in the aftermath of the Balkan wars of the 1990s. 463 Former
European Council President Herman Van Rompuy had himself said that, “Europe was built as a

457
BUCHAN (2015): i.m., 345.
458
NUGENT, i.m. 343.
459
BUCHAN (2015): i.m. 345.
460
Ibid. See also SLOBODIAN, Nataliia (2016): Russia, Ukraine and European energy security, New Eastern Europe,
May 26 2016, http://www.neweasterneurope.eu/interviews/2007-russia-ukraine-and-europe-s-energy-security
(Accessed 2019.0216)
461
VAN DER LOO, Guillaume (2016): The EU-Ukraine Association Agreement and Deep and Comprehensive Free
Trade Area: A New Legal Instrument for EU Integration without Membership, Leiden and Boston, Brill Nijhoff, 348.
462
MARHOLD, Anna (2016): EU Regulatory Private Law in the Energy Community: The Synergy between the CEER
and the ECRB in Facilitating Customer Protection. In CREMONA, Marise - MICKLITZ, Hans W, Private Law in the
External Relations of the EU,Oxford, Oxford University Press, 2016, 262.
463
European Commission Press Release (2005): The EU and South East Europe sign a historic treaty to boost energy
integration, Brussels, 25 October 2005, IP/05/1346 http://europa.eu/rapid/press-release_IP-05-1346_en.htm
(Accessed 2019.02.16)

91
community for coal and steel. Sixty-four years later, and in new circumstances, it is clear we need
to be moving towards an energy union”.464
Eventually, the European Commission called for the ECT to move beyond the Balkans and
to also cover European Neighbourhood Policy states,465 and so Moldova joined in 2010, and
Ukraine in 2011.466 More recently, in October 2016 Georgia also signed the accession protocol in
order to join the Energy Community, and is expected to become a member sometime this year. 467
The common interests of all parties with this action were described by the then European
Commissioner for Energy, Günther Oettinger, who said that “Ukraine will have access to a pan-
European energy market, based on the principles of solidarity and transparency. For the
Community, Ukraine is an important new member and security of supply further improved”.468
This statement reiterates the fact that the Energy Community facilitates the extending of the legal
boundary of the EU beyond its political-institutional boundary with the aim of ensuring its security
and stability, while third countries are also able to benefit from integrating into the the European
Union’s energy system and order.
The Energy Community Treaty469 states in its preamble that it seeks “to establish among
the Parties an integrated market in natural gas and electricity, based on common interest and
solidarity”. According to Title 1 Article 2 of the Treaty, it has among its aims the creation of a
regulatory and market framework which is stable and able to attract investments in the areas of gas
networks, the generation of power, and also transmission and distribution networks, which will
enhance stability of energy supply; creating one regulatory space in relation to trade in Network
Energy, and to increase the security of supply in this space; the improvement of the environment

464
ELLIS, Vicky (2014): EU countries agree to scrap reliance on Russian gas, Energy Live News, March 21 2014,
https://www.energylivenews.com/2014/03/21/eu-countries-agree-to-ditch-reliance-on-russia-gas/ (Accessed
2019.02.16)
465
Communication from the Commission (2006): On Strengthening the European Neighbourhood Policy, Brussels, 4
December 2006, COM (2006) 726, 8, 3.4 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52006DC0726,
(Accessed 2019.02.16)
466
Energy Community: About Us: Parties, https://www.energy-
community.org/portal/page/portal/ENC_HOME/ENERGY_COMMUNITY/Stakeholders/Parties (Accessed
2018.09.16)
467
Energy Community (2016): Ministerial Council Approves Georgia’s Accession to the Energy Community, Adopts
New Environmental Legislation, October 14 2016, https://www.energy-
community.org/portal/page/portal/ENC_HOME/NEWS/News_Details?p_new_id=13463 (Accessed 2019.02.16)
468
European Commission Press Release (2010): Commission welcomes Ukraine in Energy Community, Brussels 24
September 2010, IP/10/1173 http://europa.eu/rapid/press-release_IP-10-1173_en.htm (Accessed 2019.02.16)
469
Officially: Treaty Establishing the Energy Community, signed on 25 October 2005, came into force on 1 July 2006,
http://ec.europa.eu/transparency/regdoc/rep/1/2005/EN/1-2005-435-EN-F1-1.Pdf (Accessed 2019.02.16)

92
with regards to Network Energy, and the development of market competition in Network Energy
on a larger geographical space. The Energy Community places a strong onus upon signatory
countries, which can be seen in Article 6 of the ECT, which states that the parties are to take
measures in order to ensure that they fulfil their obligations under the Treaty, and to aid in the
Energy Community achieiving its taks. Furthermore, Article 6 goes on to say that signatory parties
are to abstain from taking any action which may lead to the jeopardisation of the Treaty’s
objectives.
In terms of the Energy Community’s institutional structure, the Treaty establishes the
Ministerial Council, the Regulatory Board, the Permanent High Level Group, the Energy
Community Secretariat, and the Fora. The Ministerial Council aims to ensure that the Treaty’s
objectives are attained, provides policy guidelines, takes various measures and adopts appropriate
Procedural Acts.470 The Ministerial Council consists of two representatives of the European Union
and one from each Contracting Party. 471 The Permanent High Level Group work includes
preparing the Ministerial Council’s work and reporting to it with regards to the progress made
towards the fulfilment of the Treaty’s objectives. 472 It consists of two European Union
representatives and one from each Contracting Party. 473 The Regulatory Board consists of one
representative of each Contracting Party’s energy regulator, and advises both the Ministerial
Council and Permanent High Level Group in relation to rules, and makes recommendations with
regards to cross-border disputes.474 The Secretariat, which is based in Vienna, is the only institution
acting on a permanent basis.475 It is headed by a Director, and its responsibility is to administer the
Energy Community’s daily activities, 476 which include providing the Ministerial Council, the
Permanent High Level Group, the Regulatory Board and the Fora with administrative support, and
reviewing the implementation of Treaty obligations by its various signatories. 477 The Fora has the
role of advising the Energy Community, and is composed of representatives from the various

470
Ibid, Article 47.
471
Ibid, Article 48.
472
Ibid, Article 53, (a) and (c).
473
Ibid, Article 54.
474
Article 58, (a) and (b).
475
Energy Community, Secretariat, https://www.energy-
community.org/portal/page/portal/ENC_HOME/ENERGY_COMMUNITY/Institutions/Secretariat (Accessed
2019.02.16)
476
Ibid.
477
Treaty Establishing the Energy Community, Article 67 (a) and (b).

93
interested stakeholders, which includes regulators, industry and industry related groups, and
consumers.478
There have been criticisms of the Energy Community, among which has been that
successful implementation of the energy acquis varies between different contracting states, thus
providing a very “mixed picture”.479 This has been coupled with issues relating to enforcement
mechanisms, with the claim being made that existing ones are weak, and that so far no financial
sanctions or binding penalties having been imposed for the breach of obligations. 480 In general,
however, the Energy Community has been hailed as a success of EU external relations policy. 481
This, at least to a certain extent, may be admitted as it has managed to integrate states that are not
full members of the European Union into a vital part of its legal order. In fact, it can be argued that
the Energy Community is an example of the already mentioned EU external governance concept,
or can also be described as a “integration without membership” model of relations, attempting to
expand and move the legal boundary of the Union, in this case the energy sectoral acquis of the
European Union to third countries such as Ukraine, while not simultaneously moving the political
boundary of the Union through official enlargement, though still allowing them greater access and
integration into the Internal Market of the EU.482
Below there shall be a survey and evaluation of Ukraine’s attempt to conform its energy
regime in line with its obligations as a signatory of the Energy Community. This shall focus on
three major areas: gas, electricity and the creation of an independent regulatory.

478
Ibid, Article 63.
479
European Parliament (2015): Energy Community: Prospects and challenges, European Parliamentary Research
Service, Briefing October 2015, 5,
http://www.europarl.europa.eu/RegData/etudes/BRIE/2015/569011/EPRS_BRI(2015)569011_EN.pdf (Accessed
2019.02.16)
480
Ibid, 8.
481
SCHWARZ, Oliver (2015): Exploring the Impact of the Energy Community: A True Pan-European Single Market
or Difference Worlds of Compliance, ECPR General Conference Université de Montréal, Montreal, 26-29 August
2015, https://ecpr.eu/Events/PaperDetails.aspx?PaperID=25993&EventID=94, (Accessed 2019.02.16)
482
PETROV, Roman (2014): Applying the European Union’s ’energy acquis’ in eastern neighbouring countries: the
cases of Ukraine and Moldova, Oil, Gas and Energy Law Intelligence, Vol. 12, Issue 2, April 2014, 1,
http://www.academia.edu/7183109/Applying_the_European_Unions_Energy_Acquis_in_Eastern_Neighbouring_Co
untries_The_Cases_of_Ukraine_and_Moldova (Accessed 2019.02.16)

94
3.4.2 Gas

In relation to the area of gas and the objectives of the EU in this area Directive 2009/73/EC states
that the through the internal market in natural gas that consumers of the European Union will be
provided with a real choice, and the achievement of gains in efficiency, more competitive prices,
greater service standards and to aid both sustainability and the security of supply. 483 Ukraine is
considered to be effectively reforming its gas sector in line with its Energy Community obligations,
through the implementation of its Gas Sector Reform Implementation Plan, having been hailed as
the first Contracting Party of the Energy Community to have developed a significant natural gas
market regulatory framework.484 It is also argued that this reform of the gas sector has the potential
to increase Central and Eastern Europe’s energy security, and thus Ukraine’s domestic reforms in
this area have an influence and importance beyond its own borders.485
In April 2015 the Ukrainian Rahda passed the Law of Ukraine on the Natural Gas Market.
The law was drafted by the Ukrainian government in close consultation with the Energy
Community Secretariat, and Naftogaz, the Ukrainian state gas and oil company. 486 The legislation
states that the law aims at implementing the Energy Community’s energy acquis due to its
obligations under the Treaty establishing the Energy Community, as well as the Asssociation
Agreement signed between Ukraine and the European Union. 487 In particular, it seeks to
implement “Directive 2009/73/EC concerning common rules for the internal market in natural
gas and repealing Directive 2003/55/EC; Regulation (EC) 715/2009 on conditions for access to
the natural gas transmission networks and repealing Regulation (EC) 1775/2005; as well as
Directive 2004/67/EC on measures to safeguard security of natural gas supply”.488

483
Preamble (1), https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0094:0136:en:PDF
(Accessed 2019.02.12)
484
Energy Community (2016): Energy Community Country Brief: Spotlight on Ukraine. Energy Community Country
Brief. 9 March 2016 Issue 3, 1 (http://enref.org/wp-content/uploads/2015/04/Final-Version-Ukraine-Country-
Brief.pdf), (Accessed 2019.02.19)
485
Dixigroup (2016): Ukraine’s Gas Sector Reform: A Future Win-Win for Ukraine and Europe. Ukrainian Think
Tank Development Initiative, 1, https://issuu.com/irf_ua/docs/dp-2016-36 (Accessed 2019.02.19)
486
RADCHENKO, Vitaliy (2016): Ukraine: Naftogaz Unbundling Plan Adopted, Lexology, 7 July 2016,
http://www.lexology.com/library/detail.aspx?g=230892a7-d324-4d08-89df- 0055bef81b84 (Accessed 2016.09.10).
487
Article 2.1,
http://www.naftogaz.com/files/Information/Ukraine%60s%20Natural%20Gas%20Market%20Law_engl.pdf
(Accessed 2019.02.12)
488
Ibid

95
 According to Article 23 Ukraine’s Gas Law, entitled “General requirements of unbundling
and independence of a gas transmission system operator (unbundling mode OU)”, paragraph 1,
the gas transmission system operator is to be a separate legal person “not part of a verticially
integrated undertaking”, and is not to carry out the production, distribution and supply of natural
gas.
This legislation was praised by the Director of the Energy Community Secretariat, who
said that “Ukraine is well advanced in gas sector reform, having adopted the EU Third Energy
Package compliant Law on Natural Gas Market which entered into force in October 2015”.489 In
general, its adoption was seen as a success which can act a model and be emulated in other attempts
at approximation to EU law. 490 The adoption of this law was followed by the creation of secondary
legislation, with the assistance of the Energy Community Secretariat. 491 However, all of the
secondary legal regulations were not entirely adopted, and in the case of some of those that were,
some of their provisions did not wholly comply with the Gas Market Law. 492
A bill was approved on July 1 2016 by the Cabinet of Ministers of Ukraine which will split
Naftogaz493 of Ukraine according to the requirements of the EU’s Third Energy Package, 494 as
specified in the Ukrainian “On the Natural Gas Market law”. 495 The resolution, named “On
unbundling of operations for transportation and storage (injection, withdrawal) of natural gas”496
was drafted by the Ukrainian government in conjunction with the Energy Community
Secretariat.497 The plan includes provision for the creation of two new entities: JSC Main Gas

489
Interfax-Ukraine News Agency (2016): Energy Community Secretariat hopes Ukraine’s energy regulator will
correct gas market regulations, 24 May 2016, http://en.interfax.com.ua/news/economic/345478.html (Accessed
2016.09.20)
490
POPOVYCH, Maksym (2016): Ukraine’s Gas Market: A thorny way to liberalisation. New Eastern Europe, 9
April 2016, http://www.neweasterneurope.eu/articles-and-commentary/1562-ukraine-s-gas-market-a-thorny-way-to-
liberalisation, (Accessed 2016.09.28).
491
Energy Community (2016): i.m, 1.
492
Interfax-Ukraine (2016): Energy Community Secretariat hopes. i.m.
493
In Ukraine it is Naftogaz, along with its subsidiaries, which carries out such tasks as gas production, storage, supply
and transmission. See RADCHENKO, (2016): i.m.
494
HAIGHT, Brent (2016) - Ukraine Government Authorizes Naftogaz Split, Gas Compression, 5 July 2016,
Accessed: October 2. http://gascompressionmagazine.com/2016/07/05/ukraine-government-authorizes-naftogaz-
split/ (Accessed 2016.10.02).
495
RADCHENKO (2016): i.m.
496
NAFTOGAZ (2016): Ukraine’s government approves Naftogaz unbundling plan, 4 July 2016, 9.
http://www.naftogaz.com/www/3/nakweben.nsf/0/471E4A2222A20B92C2257FE6003174D0?OpenDocument&yea
r=2016&month=07&nt=News& (Accessed 2016.09.09)
497
RADCHENKO (2016): i.m.

96
Pipelines of Ukraine (MGU) and JSC Underground Has Storage Facilities of Ukraine (UGSF).498
These will both take over the assets of the Ukrainian transmission system operator (TSO),
Ukrtransgaz. 499 The Ukrainian Cabinet of Ministers in February 2018 gave its approval to
eventually transfering the assets of Ukrtransgaz to Main Gas Pipelines of Ukraine, a company
created in November 2016 and which functions under the auspices of Energy and Coal Industry. 500
The European Commission has stated that the process of unbundling has needs to be completed
by 1 January 2020.501
However, reform of the gas sector has not been wholly unproblematic. One notable
example occured in September 2016 when the Ukrainian government announced that the economy
ministry would take over control of Ukrtransgaz, the subsidiary gas transportation operator of
Naftogaz, a decision which would have placed both the generator/supplier and transmitter of gas
502
under the control of the same ministry. The Secretariat of the Energy Community stated in
response that “this unilateral move is not in line with the Resolution on Unbundling adopted by
the government on July 1, nor was it consulted with the Secretariat”.503 Furthermore, it said that
“control by the same public body – the ministry of economic development and trade – over both
transmission system operator and Naftogaz' gas production and supply activities violates the
unbundling provisions applicable under Energy Community law”. 504 There was also a threat of a
possible action to enforce Energy Community rules. 505 In addition, the country’s creditors warned
that the move could put in jeopardy the disbursement of money connected to the country’s IMF

498
NAFTOGAZ. i.m.
499
Ibid.
500
SAHA, Sagatom - ZASLAVSKIY, Ilya (2018): Advancing Natural Gas Reform in Ukraine, Discussion Paper,
Council on Foreign Relations, 12, https://www.cfr.org/report/advancing-natural-gas-reform-ukraine (Accessed
2019.05.16); VOYTIV, Mykola (2017): The Forthcoming Gas Network Under the Auspices of the EU, Vox
Ukraine, 6 March 2017, https://voxukraine.org/en/majbutnya-gazotransportna-sistema-en/ (Accessed 2019.05.16)
501
GOTEV, Georgi (2018): EU and Ukraine in tug of war over Naftogaz unbundling, 19 July 2018, Euractiv,
https://www.euractiv.com/section/energy/news/eu-and-ukraine-in-tug-of-war-over-naftogaz-unbundling/ (Accessed
2019.05.16)
502
OLEARCHYK, Roman (2016): Ukraine under fire over gas group revamp, Financial Times, 18 September 2016,
https://www.ft.com/content/89a349a4-7da2-11e6-8e50-8ec15fb462f4 (Accessed 2016.09.18).
503
ZHUK, Alyona (2016): Economy Ministry puts seizing control over Ukrtransgaz on hold, Kyiv Post, 19 September
2016, https://www.kyivpost.com/article/content/business/economy-ministry-puts-seizing-control-over-ukrtransgaz-
on-hold-423225.html (Accessed 2016.09.20)
504
POWELL, William (2016): Bank, EC Condemn Ukraine Economy Ministry, Natural Gas World, 17 August 2016,
http://www.naturalgaseurope.com/bank-ec-condemn-ukraine-economy-ministry-31655 (Accessed 2016.10.05).
505
EurActiv (2016): After striking murky gas deal, Ukraine bows to West, 26 September 2016,
https://www.euractiv.com/section/europe-s-east/news/after-striking-murky-gas-deal-ukraine-bows-to-west/
(Accessed 2016.10.15)

97
bailout package.506 After a meeting between the Ukrainian Prime Minister, U.S Ambassador, and
representatives from the World Bank, European Bank of Reconstruction and Development, as well
officials of Naftogaz and Ukrtransgaz, the Ukrainian government quickly cancelled its planned
take over.507

3.4.3 Electricity

Upon obtaining independence in 1991, Ukraine inherited a highly developed electricity sector as
well as high energy consumption levels from the USSR.508 In the mid-1990s Ukraine was the first
country that had been part of the Soviet Union that underwent extensive reforms in the electricity
sector.509 A key priority of the European Commission in relation to energy reform in Ukraine has
been the introduction of a new model for the electricity market. 510 In particular, this means the
reorganizing and dismantling of Ukrenergo, the country’s state transmission company. 511 On 31
March 2016 the Ukrainian Parliament’s energy committee recommended the approval of the
Electricity Market Law draft.512 The provisions conform to the requirements of the Energy
Community Treaty and the European Union’s Third Energy Package, with its overaching goal
being the progressive liberalisation of Ukraine's electricity market. 513

506
OLEARCHY (2016): i.m.
507
VERBYANY, Volodymr (2016): Ukraine Cancels Gas Pipeline Takeover After Lender Criticism, Bloomberg, 19
September 2016, https://www.bloomberg.com/news/articles/2016-09-19/ukraine-suspends-gas-pipeline-takeover-
after-lender-criticism (Accessed 2016.10.03)
508
LOVEI, Laslo (1998): Electricity Reform in Ukraine: The impact of weak governance and budget crises, Public
Policy for the Private Sector, December 1998, Note No. 168, 2
https://openknowledge.worldbank.org/bitstream/handle/10986/11508/multi_page.pdf?sequence=1&isAllowed=y
(Accessed 2016.10.03)
509
PITTMAN, Russell (2016): Restructuring Ukraine’s Electricity Sector: What Are We Trying to Accomplish,
VoxUkraine, 7 February 2016, http://voxukraine.org/2015/02/07/restructuring-ukraines-electricity-sector-what-are-
we-trying-to-accomplish/ (Accessed 2016.10.03).
510
Interfax-Ukraine (2016): European Commission hopes Ukraine reforms energy market soon, 3 June 2016,
http://en.interfax.com.ua/news/economic/347862.html (Accessed 2016.09.30).
511
EU Today (2016): Ukraine Reforms in the Electricity Sector, 25 May 2016, http://eutoday.net/news/ukraine-
reforms-in-the-electricity-sector (Accessed 2016.09.30).
512
Energy Community: Ukraine Electricity, https://www.energy-
community.org/portal/page/portal/ENC_HOME/AREAS_OF_WORK/Implementation/Ukraine/Electricity
(Accessed 2016.09.02).
513
RADCHENKO, Vitaliy (2017): Ukraine: Electricity Market liberalised to meet the EU 3rd Energy Package
requirements, Lexology, April 18 2017, http://www.lexology.com/library/detail.aspx?g=8b4291f1-d65d-4f42-baa7-
d6d187123b27 (Accessed 2019.02.10)

98
 The full adoption of this law had been delayed for around two and a half years, even though
by this time the secondary legislation necessary for the practical implementation of the law was
already prepared. 514 The Energy Community had often criticized this lack of progress, specifically
the delay in the unbundling of Ukrenergo and distribution network operators, and has stated
catergorically that present Ukrainian legislation is not in compliance with the EU’s Third Energy
Package.515 The vacilitating in the passing of the necessary legislation in order to reform the
electricity market even provoked the intervention of the United States Ambassador to Ukraine,
Geoffrey Pyatt, who stated that his government insisted that the electricity law should be adopted
in the autumn of 2016.516
In response, Ukrainian Prime Minister Volodymir Groysman sought to reassure interested
parties that passing legislation in conformity with EU standards was a major aim of the government
and that the process was moving forward, stating on June 30 2016 at the Ukrainian Energy
Conference in Kyiv that work was underway with the various parties and factions of the Ukrainian
parliament in order to bring this about, and that he was confident that the legislation will be
approved.517 Finally, on 13 April 2017, the Ukrainian Parliament approved the law, entitled Law
of Ukraine “On Electricity Market”,518 and is to come into full effect in July 2019. 519 According
to this law, Ukraine’s electricity transmission system operator, Ukrenergo, is to be corporatized.520

514
Interfax-Ukraine (2016): Director of Energy Community: „In the area of energy efficiency Ukraine did almost
nothing”, 25 May 2016, http://en.interfax.com.ua/news/interview/345602.html (Accessed 2016.10.15):
515
Energy Community: Ukraine Electricity, i.m.
516
Ukrinform (2016): U.S expects Ukraine to adopt legislation on electricity market next fall – Ambassador Pyatt. 30
June 2016, http://www.ukrinform.net/rubric-economics/2042404-us-expects-ukraine-to-adopt-legislation-on-
electricity-market-next-fall-ambassador-pyatt.html (Accessed 2016.10.16)
517
Kyiv Post (2016): Ukraine Energy Conference assures private investors ahead of planned privatization of energy
companies, 2 June 2016, http://www.kyivpost.com/article/content/ukraine-politics/ukraine-energy-conference-
assures-private-investors-ahead-of-planned-privatization-of-energy-companies-417659.html, (Accessed 2016)
518
Ukrenergo: New Electricity Market, https://ua.energy/new-electricity-market/ (Accessed 2016.10.16).
519
Hiqstep: Ukraine’s Electricity Market Law (Law no 4493), https://hiqstep.eu/content/ukraines-electricity-market-
law-law-no-4493 (Accessed 2019.05.16).
520
Energy Community (2017): Will Ukraine’s New Electricity Market Law Create Geniune Competition on the
Market?, European Community Connected, Issue 2, October 2017, 2,
https://www.enercee.net/fileadmin/enercee/images-2017/Ukraine/Energy_Community_Connected_Issue_2.pdf
(Accessed 2019.05.16)

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3.4.4 Independent Regulator

A major issue in Ukraine’s complying with Energy Community standards relates to passing
legislation establishing an independent energy regulator.521 After much delay and criticism, on
September 22 2016 the Ukrainian parliament passed the law to create an independent energy
market regulator.522 The legislation is titled Draft Law No 2966-d “On the National Commission
for State Regulation of Energy and Public Utilities Sector”523 and was written in consultation with
the Energy Community Secretariat.524 This was signed into law by the then President Petro
Poroshenko on November 23 2016.525 This independent commission will have the responsibility
of setting power tariffs, 526 and shall be composed of two members nominated by the President,
two members nominated by the Parliament, and one nominated by the Cabinet of Ministers. 527 It
is hoped that the adoption of this legislation and it being successfully implemented will create a
truly independent regulatory authority in line with European standards. 528 The passing of this
legislation was critical for Ukraine, as the European Union directly tied it to receiving a 600-
million-euro loan to the reforming of this area. 529

521
Interfax-Ukraine (2016): Director of Energy Community, i.m.
522
ZHUK Alyona (2016): Parliament passes long-awaited law on energy market regulator, Kyiv Post, 22 September
2016, http://www.kyivpost.com/article/content/ukraine-politics/parliament-passes-long-awaited-law-on-energy-
market-regulator-423486.html (Accessed 2016.09.23)
523
RADCHENKO, Vitaliy (2016): Law on Energy Regulator Finally Adopted, Lexology,
http://www.lexology.com/library/detail.aspx?g=d22ccbe5-3634-4d4c-94da-871a123ecdc4 (Accessed 2016.10.08)
524
KUCHYNSKA, Olena (2016): New law in Ukraine establishes independent national energy regulator, Kinstellar,
November 2016. (http://www.kinstellar.com/insights/detail/425/new-law-in-ukraine-establishes-independent-
national-energy-regulator) (Accessed 2016.09.22)
525
Ibid.
526
ZINETS, Natalia – KALYMKOV, Alexei. (2016): Passing energy bills, Ukrainian MPs clear path for new EU
loan, Reuters, 22 September 2016, http://www.reuters.com/article/ukraine-energy-idUSL8N1BY2K3 (Accessed
2016.09.25)
527
ZHUK, Alyona (2016): A Week in the Rada: What was done on Sept. 20-23. Kyiv Post, 23 September 2016,
https://www.kyivpost.com/article/content/ukraine-politics/a-week-in-the-rada-what-was-done-on-sept-20-23-
423602.html (Accessed 2016.9.26).
528
DAVYDENKO, Igor – RABIJ, Myron B. – SYSOIEV, Maksym (2016): Law on Regulator entered into force,
Lexology, 29 November 2016, http://www.lexology.com/library/detail.aspx?g=6a4d1ee3-ee98-4c27-af7d-
8b8c899c527b (Accessed 2016.12.03)
529
ZINETS – KALYMKOV: i.m.

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3.4.5 Developments in Ukraine’s gas importation practices

One of the changes that have has place since the events of 2014 relate to the nature of Ukraine’s
gas importation regime. Ukraine has always been greatly dependent on Russian gas, and the
conflict that has ensued from 2014 has led Ukraine to seek alternative sources as a way of
safeguarding its energy security. This should also be seen in conjunction with efforts within the
European Union to decrease energy dependence. For example, in March 2014 the then President
of the European Council, Herman Van Rompuy, made the statement that „Today we sent a clear
signal that Europe is stepping up a gear to reduce energy dependency, especially with Russia: by
reducing our energy demand, with more energy efficiency; by diversifying our supply routes to
and within Europe and expanding energy sources, in particular renewables; by energy security on
our border and security of supply for our neighbours”.530 Ukraine, though not an EU Member
State, can be said to be identified with these stated goals of the European Union through its
membership of the Energy Community, which seeks to integrate third countries in Eastern Europe
and the West Balkans into the EU’s energy system and structure. Indeed, Ukrainian Prime Minister
Volodymyr Groysman and the EU Energy Commissioner Maros Sefcovic expressed their joint
aim of gradually weaning Ukraine away from Russian gas.531 It should also be noted that the
United States has particularly supported this goal. 532
In 2013 Ukraine received 95% of its gas imports from Russia, and in 2014 the figure stood
at around 75%.533 During the presidency of Viktor Yanukovch Ukraine received a discount on the
gas that it purchased.534 However, amidst the tensions that ensued between Ukraine and Russia,
Gazprom in early 2014 raised the gas price for Ukraine by 44%, from $268.50 per 1,000 cubic

530
ELLIS (2014): i.m.
531
RETTMAN, Andrew (2016): EU to help Ukraine cut gas Russia dependence, Euobserver, 2 September 2016,
https://euobserver.com/energy/134892 (Accessed 2016.12.05)
532
VARGAS, Luke (2016): Ukraine, while you were out, Talk Media News, 16 August 2016,
http://www.talkmedianews.com/world-news/2016/08/16/ukraine-while-you-were-out/ (Accessed 2016.09.20)
533
SOCOR, Vladimir (2015): Ukraine Rapidly Dismantling Gazprom’s Supply Monopoly, The Jamestown
Foundation, 8 April 2015, https://jamestown.org/program/ukraine-rapidly-dismantling-gazproms-supply-monopoly/
(Accessed 2016.10.03)
534
TITCOMB, James (2014): Gazprom heaps pressure on Ukraine with gas price rise, The Telegraph, 1 April 2014,
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/10736145/gazprom-gas-ukraine.html, (Accessed
2016.10.17)

101
meters to $385.50, which amounted to a rise of 44 per cent.535 This development increased the
financial pressue felt by the Ukrainian government, which at the time was negotiating the terms of
international bailout deals.536 Gazprom said that this increase was necessary as Ukraine owed $1.7
billion for gas purchases since the beginning of 2013.537 Furthermore, from June through to
October 2014 Russia completely stopped delivering gas to Ukraine. 538 Up until the time of writing,
since November 2015 Ukraine has not directly purchased gas from Russia. 539
In this context Ukraine has made attempts at lessening its dependence on Russian gas
imports, one example of this being the utilization of gas reverse flows. An important country in
this regard for Ukraine has been Slovakia, with an agreement signed in April 2014 between them
for the delivery of gas from EU states via Slovakia.540 In order to achieve this, Slovakia made the
necessary adjustments to an old pipeline that was unused.541 The gas delivered to Ukraine from
Slovakia has been Russian in origin, having been originally delivered there via the Ukrainian
pipeline. 542 This deal with Slovakia has been hailed as having aided Ukraine in getting “rid of gas
dependence on Russia”.543 From the second half of July 2016 the amount of gas being transported
from Slovakia to Ukraine via reverse flow increased significantly. 544

535
MAZNEVA, Elena (2014): Gazprom Raises Gas Export Price as Ukraine Looks for Cash, Bloomberg, 1 April
2014, https://www.bloomberg.com/news/articles/2014-04-01/gazprom-raises-gas-export-price-as-ukraine-looks-for-
cash (Accessed 2016.10.03)
536
Bloomberg (2014): Gazprom hikes up gas price by 44%, Energy Voice, 1 April 2014,
https://www.energyvoice.com/marketinfo/56559/gazprom-hikes-ukraine-gas-price-44/ (Accessed: 2016.10.05)
537
Ibid.
538
SOCOR (2015): i.m.
539
Interfax (2018): Ukraine marks 1,000 days without Russian gas, Kyiv Post, 23 August 2018,
https://www.kyivpost.com/business/ukraine-marks-1000-days-without-russian-gas.html (Accessed 2019.02.17)
540
COLIN, Harrison – PRINCOVA, Zuzana (2015): A quiet gas revolution in Central and Eastern Europe, Energy
Post, 29 October 2015, http://www.energypost.eu/quiet-revolution-central-eastern-european-gas-market/, (Accessed:
2016.10.01)
541
Reuters (2014): Slovak gas pipeline seen ready to supply Ukraine from September, 19 May 2014,
http://af.reuters.com/article/idAFL6N0O53Y320140519 (Accessed 2016.12.01)
542
BERSHIDSKY, Leonid (2016) How Ukraine Weaned Itself Off Russian Gas, Bloomberg, 12 January 2016,
https://www.bloomberg.com/view/articles/2016-01-12/how-ukraine-weaned-itself-off-russian-gas (Accessed
2016.12.29)
543
Ukraine Today (2016): Slovakia helps Ukraine to get rid of gas dependence on Russia – expert, 11 July 2016,
http://uatoday.tv/business/slovakia-helps-ukraine-to-get-rid-of-gas-dependence-on-russia-expert-693322.html
(Accessed 2016.09.18)
544
The Slovak Spectator (2016): Volume of transported gas from Slovakia to Ukraine begins to grow, 5 August 2016,
,http://spectator.sme.sk/c/20232149/volume-of-transported-gas-from-slovakia-to-ukraine-begins-to-grow.html
(Accessed 2016.09.18). For further details, see Ukrinform (2016): Ukraine increases volume of reverse gas flow from
Poland, Slovakia. 29 July 2016, http://www.ukrinform.net/rubric-economics/2058545-ukraine-increases-volume-of-
reverse-gas-flow-from-poland-slovakia.html (Accessed 2016.10.01); Ukraine Today (2016): Ukraine maximises gas
import from Slovakia, 1 August 2016, http://uatoday.tv/business/ukraine-maximises-gas-import-from-slovakia-
707901.html (Accessed 2016.10.02); Ukraine Today (2016). Slovakia wants to increase reverse gas supplies to

102
 However, the issue of reverse flows of gas has had its problematic moments with regards
to questions of law. For example, the Ukrainian government protested to the European Union in
2015 due to an agreement between Gazprom and Eustream which allows the former to inhibit
reverse flows through one of the major pipelines that carries gas to European countries through
Ukraine, specifically the one located at the Uzhgorod-Velke Kapusany transit points.545 Ukraine
claimed that the arrangement preventing the reverse flow is in violation of EU law, 546 in particular
the anti-monopoly law and the 3rd Energy Package.547 Prime Minister Arseny Yatsenyuk said that
the agreement was obstructing Ukraine’s efforts at lessening its dependence on Russian gas, and
that with a full reverse flow from Slovakia Ukraine would eventually be able to obtain all of its
gas imports from the EU.548 Furthermore, there have been questions as to the legality of the reverse
flows themselves, raised by the Russian state gas company Gazprom. 549 The company claimed
that any such reverse flows would require its approval. 550 This also relates to reverse flows from
Slovakia which would go through any one of the four pipelines that transport Russian gas via
Ukraine to Slovakia. 551 In response, the European Commission has supported the practice, with a
spokesperson for the European Commissioner for Energy stating that the reverse flows in this case
were “legal perfectly sound”.552

Ukraine, 7 September 2016, http://uatoday.tv/business/slovakia-wants-to-increase-reverse-gas-supplies-to-ukraine-

741925.html (Accessed: 2016.10.01)
545
LIPTAKOVA, Jana. (2015): Ukraine complains to EU over Eustream, The Slovak Spectator, 25 June 2015,
http://spectator.sme.sk/c/20058396/ukraine-complains-to-eu-over-eustream.html (Accessed 2016.09.26)
546
REUTERS (2015): Slovakia rejects Ukraine complaint over gas flows, 4 June 2015,
http://af.reuters.com/article/energyOilNews/idAFL8N0ZA2CU20150624?pageNumber=1&virtualBrandChannel=
(Accessed 2016.09.20)
547
BADIDA, Jozef (2015): Interview Andriy Kobolev, CEO Naftogaz : „Gazprom breaches EU law by blocking
reverse flow to Ukraine”, Energy Post, March 4 2015, http://energypost.eu/interview-andriy-kobolev-ceo-naftogaz-
gazprom-breaching-eu-law-blocking-reverse-flow-ukraine/ (Accessed 26 September 2016)
548
LIPTAKOVA (2015): i.m.
549
Reuters (2014): Gazprom says “reverse flow” gas for Ukraine raises legal questions, April 5 2014,
http://www.reuters.com/article/ukraine-crisis-gazprom-idUSL5N0MX04O20140405 (Accessed 26 September 2016)
550
Reuters (2014): Plans for EU gas flows to Ukraine could be blocked by Russia, April 7 2014,
http://www.reuters.com/article/ukraine-crisis-gas-idUSL6N0MZ29U20140407 (Accessed 26 September 2016)
551
Ibid.
552
EU Business (2014): Alternative gas flow to Ukraine ‘perfectly legal’ says EU, 17 June 2014,
http://www.eubusiness.com/news-eu/ukraine-russia-gas.woc (Accessed 26 September 2016)

103
 ***

The above analysis has shown that indeed there have been serious changes and developments in
the area of Ukraine’s energy policy, structure and practices. In the area of Ukraine’s attempt to
approximate to the EU’s energy acquis , it has been seen that gas reform has been hailed as a great
success, and the creation of an independent regulator, after a lack of progress and a great deal of
criticism, has moved ahead, while the electricity sector’s reform had experienced delays. In
addition, the stopping of direct imports of gas from Russia for Ukraine’s domestic consumption
and the utilization of reverse flows from other neighbouring countries can be considered to be a
significant change in Ukraine’s energy culture, in spite of the legal issues that have been raised as
a consequence. In its attempts to approximate to the European Union’s standards and norms in the
area of energy can be seen one important manifestation of the broader framework of Ukraine’s
European integration, which involves integrating into the greater EU regulatory framework and
the strengthening and deepening of relations.

3.5 Case Study: Hungary and Certain Aspects of Ukraine’s European Integration

Earlier in this dissertation there was a case study relating to certain aspects of Hungary’s energy
relations with Russia. Here there shall now be a brief case study relating to very select components
of Hungary’s relations with Ukraine which have a certain relevance to the latter’s relationship with
the broader European Union. After a recounting of certain aspects of the historical background to
the Hungary-Ukraine relationship, two areas connected to Hungary’s relations to Ukraine’s
attempt to more deeply integrate with the European Union shall be briefly surveyed, specifically
connected to visa-free travel for Ukrainian citizens to the European Union and the possibility of
Ukrainians have greater access to EU labour markets in general, and how this may relate to
Hungary specifically.
Parts of the territory of what is now the present-day Republic of Ukraine have had close
connections to the early history of the Magyar tribes and to the history of the Hungarian state. One
of the main points along the route of the Magyars final destination in the Carpathian Basin was
Etelköz, in what is now Southern Ukraine, which they occupied in the latter part of the 8th century

104
AD.553 The Hungarian Kingdom included the region known as Zakarpattia/Kárpátalja in Western
Ukraine, which encompasses such cities as Berehove/Beregszász, Uzhhorod/Ungvár and
Mukachevo/Munkács, which were part of the Hungarian state until the Treaty of Trianon. In
medieval times there were important marital alliances between the Royal House of Árpád and that
of Kyivan Rus. Of particular note was the marriage between the Hungarian King András I and
Princess Anastasia, daughter of Yaroslav I the Wise of Kiev. 554 Beyond the territories that were
part of the Hungarian Kingdom proper, other regions of Western Ukraine have had important
historical ties to Hungary, specifically the region of Galicia, with its historical center Lviv, or,
according to its Austro-Hungarian name, Lemberg. In 1189 King Béla III of Hungary occupied
the territory of Galicia and declared himself King of Galicia and Lodomeria. 555 For a time in the
early part of the 13th century the territory was ruled by Kálmán, son of the Hungarian King András
II, who took the title of King of Galicia and Lodomeria. 556 It was these historical connections
which in fact acted as the legal foundation for the Austro-Hungarian Empress Maria Theresa’s
incorporation of this territory into her empire after the partition of the Polish-Lithuanian
Commonwealth in 1772, being based on the medieval claims of the Hungarian Crown. 557
Since the fall of the Soviet Union, Hungary has supported Ukraine’s statehood and the
country’s path of European integration. It is often stated that Hungary was one of the first countries
to recognise Ukraine’s independence from the Soviet Union, but in fact, there is evidence that
Hungary was actually the first country in the world to grant this recognition. 558 Furthermore,
Hungary was the first country to open an embassy in independent Ukraine and the Ukrainian
embassy in Budapest was the country’s first diplomatic entity established in a foreign country.559
On 6 December 1991 the two countries signed a Treaty on Friendship and Cooperation. 560

553
CARTLEDGE, Bryan (2006), The Will to Survive: A History of Hungary. London, Timewell Press, 4.
554
RAFFENSPERGER, Christian (2012) Reimagining Europe: Kievan Rus’ in the Medieval World, 988-1146.
Cambridge, Massachusetts and London, England, Harvard University Press, 100.
555
MAGOCSI Paul R. (2010): A History of Ukraine: The Land and its Peoples (Second Edition). Toronto, University
of Toronto Press, 123; WILSON, Andrew (2005), Ukraine’s Orange Revolution. Yale University Press, New Haven
and London, 34.
556
HOLLY, Karol (2007): Princess Salomea and Hungarian-Polish Relations in the Period 1214-1241, Historický
časopis, 55, Supplement, 6, http://www.historickycasopis.sk/pdf/HCsupplement2007.pdf, (Accessed 2018.08.10)
557
WOLFF, Larry (2010): The Idea of Galicia: History and Fantasy in Habsburg Political Culture, Stanford, Stanford
University Press, 39.
558
FEDINEC, Csilla (2012): Ukraine’s place in Europe and Two Decades of Hungarian-Ukrainian Relations, Foreign
Policy Review 9(1), 74, http://real.mtak.hu/12847/1/Fedinec_ForeignPolicyReview2013.pdf, (Accessed 2018.08.25)
559
Embassy of Ukraine in Hungary: Initiation of diplomatic relations with Hungary,
https://hungary.mfa.gov.ua/en/embassy/history (Accessed 2018.08.25)
560
FEDINEC (2012): i.m. 75.

105
Hungary’s relations with Ukraine have included consistent support for the country’s European
aspirations and ultimate membership.561 Furthermore, it has supported Ukraine in its desire to
achieve visa-free travel with the European Union and in the area of the free trade agreement.562
The general motivation for the deepening of relations with Ukraine and support for that state
includes the fact that the country is a direct neighbor of Hungary, various security interests, and
the fact Ukraine is home to a large Hungarian minority located mainly in the Western region of
Zakarpattia/Kárpátalja.563

3.5.1 Hungary and visa-free travel to the European Union for Ukrainian citizens

As already discussed, the European Union officially waived visa requirements for citizens of
Ukraine on June 11 2017. This can be considered as a major milestone in Ukraine’s attempt to
achieve a closer and more deeply integrated relationship with the European Union. Hungary was
a major supporter of Ukraine being granted visa-free travel to the Member States of the European
Union.564 In fact, before the European Parliament had fully approved the granting of such travel
rights to Ukrainian citizens, Hungary announced on 24 November 2017 that, despite resistance
from certain EU countries, that it would grant D type visas free of charge to Ukrainian citizens.565
D type visas grants the right to the holder to stay in a country longer than 90 days and to travel
around the Schengen Area.566 Hungarian Prime Minister Viktor Orbán had made the statement that
"After the three hard years that Ukraine has gone through in the name of European values, the
EU has a moral obligation to grant visa-free access to Ukraine."567 The Prime Minister also
requested of his Ukrainian counterpart that Hungarian citizens travelling to Ukraine be granted the
same possibility. 568

561
Cabinet Office of the Prime Minster (2016): Hungary support’s Ukraine’s EU membership, 25 November 2016,
http://www.miniszterelnok.hu/hungary-supports-ukraines-eu-membership/, (Accessed 2018.06.25)
562
Ibid.
563
FEDINEC (2012): i.m. 74.
564
Cabinet Office of the Prime Minister (2016): Hungary Supports Ukraine’s EU Membership, 25 November 2016,
http://www.miniszterelnok.hu/hungary-supports-ukraines-eu-membership/, (Accessed 2018.06.19)
565
Y Axis News (2016): Hungary to grant long-stay visas freely to Ukraine, 26 November 2016 , https://www.y-
axis.com/news/hungary-grant-long-stay-visas-freely-ukraine/, (Accessed 2018.06.19)
566
Business Standard (2016): Hungary offers Ukrainians free long-stay visas, 24 November 2016,
https://www.business-standard.com/article/pti-stories/hungary-offers-ukrainians-free-long-stay-visas-
116112401387_1.html, (Accessed 2018.06.19)
567
Ibid.
568
Ibid.

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3.5.2 The employment of Ukrainian labour

It cannot be denied that a major aspect of European integration is the right of citizens of Member
States to move and work freely within the territory of the European Union. The Association
Agreement signed between the European Union and Ukraine does not grant such a right to the
citizens of the latter. However, it lists two provisions in particular relating to workers. 569 Though
it must be pointed out that these provisions do not provide free access to the European Union
labour market for Ukrainian citizens, and in fact, as there is no common European Union policy
on labour migration, it is thus necessary for Ukraine to develop specific bilateral relationships with
EU member states in relation to the issue of labour importation. 570 Due to various factors, an
obvious destination for the importation of Ukrainian labour within the European Union are the
Central and Eastern European Member States, particularly those that comprise the Visegrád
Group. In relation to Hungary, it has been widely acknowledged that, with regards to certain
sectors the country lacks the necessary labour to fill positions. 571 Though there are no plans for a
large scale guest worker program, there has been some attempt to employ a limited number of

569
These are articles 17 and 18.According to Article 17. 1. Subject to the laws, conditions and procedures applicable
in the Member States and the EU, treatment accorded to workers who are Ukrainian nationals and who are legally
employed in the territory of a Member State shall be free of any discrimination based on nationality as regards
working conditions, remuneration or dismissal, compared to the nationals of that Member State.
2. Ukraine shall, subject to the laws, conditions and procedures in Ukraine, accord the treatment referred to in
paragraph 1 of this Article to workers who are nationals of a Member State and who are legally employed in its
territory.
Additionally, Article 18, entitled “Mobility of workers” states that:
1. Taking into account the labour market situation in the Member States, subject to the legislation and in compliance
with the rules in force in the Member States and the EU in the area of mobility of workers: (a) the existing facilities
of access to employment for Ukrainian workers accorded by Member States under bilateral agreements should be
preserved and, if possible, improved; (b) other Member States shall examine the possibility of concluding similar
agreements.
2. The Association Council shall examine the granting of other more favourable provisions in additional areas,
including facilities for access to professional training, in accordance with laws, conditions and procedures in force
in the Member States and in the EU, and taking into account the labour market situation in the Member States and in
the EU.
570
STABANOV, Roman D (2014): Prospects for Ukraine’s Integration Into the EU Labour Market in the Context of
the Ukraine – EU Association Agreement, Torun International Studies, No. 1 (7), 60,
http://apcz.umk.pl/czasopisma/index.php/TSM/article/viewFile/6208/5664, (Accessed 2018.06.19)
571
DW (2018): Hungary critically needs labor that’s nowhere to be found, 5 May 2018,
https://www.dw.com/en/hungary-critically-needs-labor-thats-nowhere-to-be-found/a-43651003, (Accessed
2018.06.19)

107
Ukrainians in certain areas, such the construction sector via an advertising campaign. 572 For the
year 2019, Hungary actually raised the quota of work permits for non-EU citizens to 57, 000.573
Hungarian law also allows the citizens of third-countries that neighbour Hungary, such as Ukraine,
to be employed in certain professions without the need for a work permit. 574 Additionally, over
time the Hungarian Ministry of Finance has significantly raised the number of such positions that
may be filled by such citizens without the need for a work permit. 575 However, it has been
acknowledged that in general Hungary has something of conservative policy towards its labour
market and to seeking migrants from Ukraine on a somewhat larger scale, which to a certain extent
contrasts with the approach of Poland or the Czech Republic, both of which have a relatively high
number of Ukrainians working their respective countries. 576 It should also be noted that Hungary
is attractive to Ukrainian citizens belonging to the Hungarian minority. 577

572
SZAKACS, Gergely (2017): Hungary construction sector eyes Belarus, Ukraine, to tackle labour shortage, Reuters,
3 March 2017, https://www.reuters.com/article/hungary-construction-belarus/hungary-construction-sector-eyes-
belarus-ukraine-to-tackle-labour-shortage-idUSL5N1GG3RB, (Accessed 2018.06.19)
573
Budapest Business Journal (2019): Work permit quota for non-EU nationals set at 57, 000 in 2019, 15 February
2019, https://bbj.hu/economy/work-permit-quota-for-non-eu-nationals-set-at-57000-in-2019_161597 (Accessed
2019.05.15)
574
Budapest Business Journal (2019): Foreign Employees in Hungary: a Solution to Workforce Shortage?, 12 May
2019, https://bbj.hu/inside-view/foreign-employees-in-hungary-a-solution-to-workforce-shortage_164776
(Accessed 2019.05.15)
575
Daily News Hungary (2019): Migrants without work permits coming from Serbia and Ukraine, 6 April 2019,
https://dailynewshungary.com/migrants-without-work-permits-coming-from-serbia-and-ukraine/ (Accessed
2019.05.15)
576
SZAKACS, i.m.
577
LENDEL, Myroslava (2016): Migration of Ukrainians to Central European Countries in the context of the
Postmaidan internal and international crisis, Public Policy and Administration, Vol. 5, No. 4, 2016, 556,
https://www.mruni.eu/upload/iblock/f83/03_VPA_2016-15-4_LENDEL-Migration.pdf (Accessed 2018.06.19)

108
 CHAPTER 4

THE EUROPEAN UNION’S RESTRICTIVE MEASURES REGIME AGAINST RUSSIA

4.1 Background to the Events in Crimea and the Donbass

A major outcome of events in Crimea and East Ukraine has been the imposition of a regime
restrictive measures and sanctions on the Russian Federation by the European Union, which has
been followed by counter-measures from the former. It cannot be denied that this has had a major
impact on bilateral European Union-Russia relations, impacting many different facets of the
relationship between the two, also on the level of the individual EU Member States. Thus, it is
justified to examine this topic as it has a natural and necessary place along with the various legal
and political agreements which exist between the two. The events that took place in Crimea and
East Ukraine after the 2014 Euromaidan Revolution profoundly impacted relations between Russia
and Ukraine, and Russia and the Euro-Atlantic community. For the first time since the wars in the
former Yugoslavia in the 1990s, armed conflict was seen in the heart of the European continent.
This development provoked various responses from different sectors of the international
community, one of the most important of which were the sanctions that were placed on Russia by
the European Union. Here there shall be a survey of the major features of the restrictive measures
regime that was imposed and the specific areas of European Union-Russia relations that they
impact. Additionally, there shall be an examination of the possibility for this sanction regime to be
lifted eventually, including various conditions that have been put forward as necessary for this to
occur, as well as the voices from various European Member States expressing the desire for this
development to take place, as they see the sanctions placed on Russia as being detrimental to their
own national interests.
The European Union, being an international actor in its own right, has attempted to
formulate a policy in order to deal with the conflict in Ukraine, which has involved creating a
regime of restrictive measures and sanctions. Naturally, as in other cases where the European
Union exercises its role as an actor on the international stage, due to its own fundamental and
intrinsic nature, the implementation of these measures has naturally involved an attempt at
coordination and articulation of a common policy among its 28 Member States. One of the

109
European Union’s external relations tools is the ability to impose sanctions on third countries. 578
Sanctions have been defined as being “necessary and useful measures in situations where states
contemplate or actually adopt policies which violate international obligations and endanger
community values”, and which “must be capable of application and must carry some negative
power, whether symbolic or real.” 579
In order to understand the events that occurred in Crimea in 2014, it is necessary to look at
the peninsula’s historical background. Crimea, including Sevastopol, is a region that has a very
strong symbolic and geopolitical meaning for Russia. Crimea became a part of the Russian Empire
in 1783 after the Tsarist forces defeat of the Ottoman Empire. 580 Later, with the creation of the
Soviet Union, Crimea was a part of the Russian Soviet Federative Socialist Republic, however, in
1954 the region was reassigned to the Ukrainian Soviet Socialist Republic by Nikita
Khrushchev.581 With the dissolution of the Soviet Union and the independence of Ukraine, the
Crimean peninsula remained a part of Ukraine, however this state of affairs was not without
controversy, particularly due to the fact that the majority of the Crimean population is ethnic
Russian. 582 As a result, certain sectors of Crimea’s ethnic Russian population wished to assert
sovereignty and to strengthen the peninsula’s connections with Russia which caused tension with
the central Ukrainian government. 583
An important issue that needed to be dealt with when the Soviet Union came to an end and
Ukraine and the Russian Federation came into being as independent entities was the division of
the Soviet Black Sea Fleet located at Sevastopol, with both claiming it as their own. 584 In 1997
Russia and Ukraine signed the Partition Treaty on the Status and Conditions of the Black Sea Fleet,

578
The European Union’s power to impose restrictive measures on third countries is contained in Article 215 TFEU .
It states that: „Where a decision, adopted in accordance with Chapter 2 of Title V of the Treaty on European Union,
provides for the interruption or reduction, in part or completely, of economic and financial relations with one or more
third countries, the Council, acting by a qualified majority on a joint proposal from the High Representative of the
Union for Foreign Affairs and Security Policy and the Commission, shall adopt the necessary measures. It shall inform
the European Parliament thereof”.
579
DOXEY, Margart (1983): International Sanctions in Theory and Practice, Case Western Reserve Journal of
International Law, Volume 15, Issue 2, 273, 274,
https://scholarlycommons.law.case.edu/cgi/viewcontent.cgi?article=1806&context=jil, (Accessed 2018.06.2)
580
BBC News (2018): Crimea profile, 17 January 2018, https://www.bbc.com/news/world-europe-18287223,
(Accessed 2018.06.2)
581
Ibid.
582
Ibid.
583
Ibid.
584
DW (2014): Bound by treaty: Russia, Ukraine and Crimea, 11 March 2014, http://www.dw.com/en/bound-by-
treaty-russia-ukraine-and-crimea/a-17487632, (Accessed 2018.06.2)

110
which partitioned the Soviet Black Sea Fleet between Russia (receiving 81.7%) and Ukraine
(receiving 18.3%), and gave the former the right to use the Port of Sevastopol for 20 years, that is,
until 2017.585 Later, the Memorandum on Security Assurances in connection with Ukraine’s
accession to the Treaty on the Non-Proliferation of Nuclear Weapons was signed, which came
about as a result of Ukraine handing over the Soviet nuclear arsenal located on its territory, in
which the Russian Federation, the United Kingdom and United States affirmed their commitment
to Ukraine’s independence and territorial integrity. 586 In 2010 the Agreement between Ukraine and
Russia on the Black Sea Fleet in Ukraine, also known as the Kharkiv Accords, was signed, which
concerned the extension of Russia’s lease on the Black Sea fleet base in Sevastopol for another 25
years, from 2017 to 2042.587
Russia’s interests with regards to Crimea relate to geopolitical, military and historical-
cultural considerations. Most obviously, by having control over the Crimean Peninsula, Russia is
able to continue to access Sevastopol’s naval base, which hosts Russia’s Black Sea Fleet.588
However, another issue of importance to many in the Russian Federation is the symbolic-
emotional connection to the Crimean peninsula. To understand this, one need look no further than
President Vladimir Putin’s statement in the aftermath of the referendum organized in Crimea:
“Everything in Crimea speaks of our shared history and pride. This is the location
of ancient Khersones, where Prince Vladimir was baptised. His spiritual feat of adopting
Orthodoxy predetermined the overall basis of the culture, civilisation and human values that unite
the peoples of Russia, Ukraine and Belarus. The graves of Russian soldiers whose bravery
brought Crimea into the Russian empire are also in Crimea. This is also Sevastopol – a legendary
city with an outstanding history, a fortress that serves as the birthplace of Russia’s Black Sea
Fleet. Crimea is Balaklava and Kerch, Malakhov Kurgan and Sapun Ridge. Each one of these
places is dear to our hearts, symbolising Russian military glory and outstanding valour.”589

585
BROWNLIE Ian - CRAWFORD James (2012): Brownlie’s Principles of Public International Law, 8 th Edition,
Oxford, Oxford University Press, 431.
586
Articles 1 and 2.
587
CONNOLLY, Richard – COPSEY, Nathaniel (2013): The Great Slump of 2008 and Ukraine’s Integration with the
European Union. In FEKLYUNINA, Valentina – WHITE, Stephen eds.: The International Economic Crisis and the
Post-Soviet States. London and New York, Routledge, 221.
588
SCHWARTZ, Paul N (2014): Crimea’s Strategic Value for to Russia, Center for Strategic & International Studies,
18 March 2014, https://www.csis.org/blogs/post-soviet-post/crimeas-strategic-value-russia, (Accessed 2018.06.2)
589
President of Russia (2014): Address by President of the Russian Federation, 18 March 2014,
http://en.kremlin.ru/events/president/news/20603, (Accessed 2018.06.5)

111
 With the Euromaidan Revolution in Kiev, the ethnic Russian population grew fearful of
their rights and cultural identity being put in jeopardy as a result of what many among them saw
as an assertion of Ukrainian nationalism. 590 On 27 February 2014, forces described by the Russians
as self-defense units created by local Crimean residents but which Ukraine claimed were in fact
the actual Russian military took control of strategic locations throughout Crimea, including the
parliament in Simferopol. 591 On 16 March a referendum was organized by Crimea’s pro-Russian
leadership, which claimed an 83% turnout and a 96% vote in favour of unification with the Russian
Federation.592 Subsequently, the Russian Federation passed the Federal Constitutional Law of the
Russian Federation of March 21, 2015 NO. 6 – FKZ, “About acceptance to the Russian Federation
of the Republic of Crimea and education as part of the Russian Federation new subjects – the
Republic of Crimea and the federal city of Sevastopol” which recognized Crimea as a part of the
Russian Federation in light of the results of the March 16 2014 referendum held in Crimea. 593
Later, on March 24, President Putin presented a proposal to the Russian Duma aiming to terminate
the legal effect of the abovementioned agreements with regards to the status of Russia’s Black Sea
Feet in Ukraine.594 This proposal subsequently received unanimous support from the Duma. 595
Additionally, the Donbass region in Eastern Ukraine, particularly the regions of Donetsk
and Luhansk oblasts, has been the scene of armed conflict between Ukrainian government forces
and separatists.596 This began in 2014, and has led to the separatists taking control over parts of

590
DW (2014): Fear and suspicion in Crimea, 28 February 2014, https://www.dw.com/en/fear-and-suspicion-in-
crimea/a-17466075, (Accessed 2018.06.5)
591
MACIAS, Amanda (2015): A detailed look at how Russia annexed Crimea, Business Insider, 24 March 2015,
https://www.businessinsider.com/how-russia-took-crimea-2015-3, (Accessed 2018.06.5) As to the identity of this task
force, according to Russia this was composed of self-defense units created by local Crimean residents, while Ukraine
claimed that these were in fact Russian forces. See ABC News, Ukrainian defence ministry says Russian forces have
seized missile defence units in Crimea, 5 March 2014, http://www.abc.net.au/news/2014-03-05/russia/5301724
(Accessed 2018.06.05).
592
Euractiv (2014): Moscow wins Crimea ’referendum’, West readies sanctions, 17 March 2014,
https://www.euractiv.com/section/global-europe/news/moscow-wins-crimea-referendum-west-readies-sanctions/,
(Accessed 2018.06.5)
593
Art. 1, 2.(1) http://cis-legislation.com/document.fwx?rgn=66256, (Accessed 2018.06.5)
594
TASS Russian News Agency (2014): State Duma approves denunciation of Russian-Ukrainian agreements on the
Black-Sea Fleet, 31 March 2014, http://tass.com/russia/725964, (Accessed 2018.06.5)
595
Ibid.
596
RAPHELSON, Samantha (2018): ’Simmering Conflict’ In Eastern Ukraine Remains at An Impasse, NPR, 10
January 2018, https://www.npr.org/2018/01/10/577104670/simmering-conflict-in-eastern-ukraine-remains-at-an-
impasse?t=1534591585641, (Accessed 2018.06.5)

112
the Donbass region, 597 even having declared the independence of Donetsk and Luhansk. 598 Around
10, 000 people have been killed in armed conflict in this region, and around 1.7 million people
have been forced to leave their homes. 599 Ukraine has claimed that Russia has backed the
separatists with soldiers, weapons and other support, while the latter has consistently denied this.600
In an effort to bring a resolution to the conflict, on 5 September 2014 in Minsk an agreement later
known as Minsk-1 was signed under the auspices of the OSCE, which was also signed by the
separatists in Donetsk and Luhansk. 601 Later, the second Minsk agreement was signed on 11
February 2015. 602 However, this has not led to a complete end of the conflict, which still continues
up until the present time.

4.2 Reaction of the European Union

The European Union condemned Russia’s actions in Crimea as an “illegal annexation”.603 The
sanctions placed on Russia by the European Union can be said to be divided into two categories,

597
Al Jazeera (2018): Ukraine declares Russian ‘occupation’ in eastern region, 18 January 2018,
https://www.aljazeera.com/news/2018/01/ukraine-declares-russian-occupation-eastern-region-
180118164950405.html, (Accessed 2018.06.5)
598
Al Jazeera (2014): Ukraine separatists declare independence, 12 May 2014,
https://www.aljazeera.com/news/europe/2014/05/ukraine-separatists-declare-independence-
201451219375613219.html, (Accessed 2018.06.5)
599
Al Jazeera (2014): i.m.
600
TOLER, Aric – HARING, Melinda (2017): How Putin funds and commands the war in Ukraine, 27 April 2017,
Newsweek, https://www.newsweek.com/how-putin-funds-and-commands-war-ukraine-589733, (Accessed
2018.06.5)
601
Euromaidan Press: Everything you wanted to know about the Minsk peace deal, but were afraid to ask,
http://euromaidanpress.com/minsk-agreements-faq/, (Accessed 2018.06.5)
602
Ibid. The 13 points of the latest form of the Minsk Agreement, in a summarized form (see European Parliament:
Ukraine and the Minsk II agreement: On a frozen path to peace?, Briefing, January 2016,
http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/573951/EPRS_BRI(2016)573951_EN.pdf) are:
1. Immediate, full bilateral ceasefire as of 15 February 00:00.
2. Withdrawal of all heavy weapons by both sides, to be completed within 14 days.
3. Effective monitoring regime for the ceasefire and withdrawal of heavy weapons by the OSCE.
4. Launch of dialogue on modalities of local elections in accordance with Ukrainian legislation.
5. Pardon and amnesty of figures involved in the conflict.
6. Release of all hostages and other illegally detained people, based on the 'all for all' principle.
7. Safe delivery of humanitarian aid to those in need, based on an international mechanism.
8. Restoration of full social and economic links with affected areas.
9. Full Ukrainian control over its border with Russia throughout the conflict zone.
10. Withdrawal of all foreign armed groups, weapons and mercenaries from Ukrainian territory.
11. Constitutional reform in Ukraine with decentralisation as a key element; a new constitution by the end of 2015.
12. Local elections in Donetsk and Luhansk regions to be held according to OSCE standards.
13. Intensifying of the work of the Trilateral Contact Group.
603
European Council/Council of the European Union: EU restrictive measures in response to the crisis in Ukraine,
http://www.consilium.europa.eu/en/policies/sanctions/ukraine-crisis/, (Accessed 2018.06.10)

113
which are restrictive measures in response to the events in Crimea, and those sanctions due to the
conflict in the Donbass region in Eastern Ukraine. 604 The former consists mainly of financial and
travel restrictions on national and business entities connected to Crimea’s being incorporated into
the Russian Federation.605 The measures relating to the conflict in the Donbass are economic
sanctions tied to the implementation of the Minsk Accords. 606
Initially, in the early stages of the crisis, the Council released a statement saying that it
condemned "the clear violation of Ukraine's sovereignty and territorial integrity by acts of
aggression by the Russian armed forces as well as the authorization given by the Federation
Council of Russia on 1 March for the use of the Russian armed forces on the territory of
Ukraine."607 The Member States of the European Union also cancelled their plans to participate in
the G8 Summit in June, with EU High Representative for Foreign Affairs and Security Policy,
Catherine Ashton, saying that there must be a peaceful resolution to the crisis in accordance with
international law and called on Russia to withdraw its troops to the territory where they are
permanently based in accordance with the agreement for the stationing of the Black Sea
Fleet..608 At this early stage, the Council warned that due to a lack of steps by Russia to de-
escalate the situation, the EU would have to decide what consequences this what have for the EU-
Russia bilateral relationship. 609
In response to the referendum organized in Crimea, the Foreign Affairs Council issued a
statement strongly condemning the action, making it clear that it did not recognize the outcome. 610
Council Decision 2014/145/CFSP of 17 March 2014 concerning restrictive measures in respect of
actions undermining or threatening the territorial integrity, sovereignty and independence of
Ukraine611 was adopted, which originally named 21 individuals, with this progressively being

604
SOHN, Roman – GIC, Ariana (2018): Russia Sanctions: test of EU commitment to international law, Euobserver,
23 July 2018, https://euobserver.com/opinion/142434, (Accessed 2018.07.20)
605
Ibid.
606
Ibid.
607
European Council/Council of the European Council (2014): Foreign Affairs Council, 03/03/2014,
http://www.consilium.europa.eu/en/meetings/fac/2014/03/03/, (Accessed 2018.07.20)
608
Ibid.
609
Ibid.
610
European Council/Council of the European Union (2014): Foreign Affairs Council, 17/03/2014,
http://www.consilium.europa.eu/en/meetings/fac/2014/03/17/, (Accessed 2018.06.20)
611
Council Decision 2014/145/CFSP of 17 March 2014 concerning restrictive measures in respect of actions
undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, OJ L 78, 17.3.2014, p.
16–21, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014D0145 (Accessed 2018.06.20)

114
extended to cover 161 individuals and 41 entities. 612 This involves the adoption of restrictive
measures against these officials, including travel bans and the freezing of assets.613 These had been
extended in March 2018 until 15 September 2018, and later these were extended in September
2018 to last until 15 March 2019.614
Later, on 23 June the Council Regulation No 692/2014 was adopted.615 These sanctions
include the banning of the importation of goods which have their origin in either Crimea or
Sevastopol if they do not possess Ukrainian certificates; the prohibiting of investing in the Crimean
peninsula, which also stipulates that Europeans and companies based in the European Union are
no longer allowed to buy in Crimea either real estate or entities, nor engage in the financing of
Crimean companies, or the supplying of related services, nor made investments in the
infrastructure projects in six sectors; the banning of the provision of tourist services in both Crimea
and Sevastopol, which also affects European cruise ships, who are prohibited from calling in at
Crimean ports (unless there is an emergency); a prohibition on exporting goods and technology
for use in the transportation, telecommunications and energy secrots, and also for the purposes of
exploring for gas, oil and mineral resources; and relating to the infrastructure of these sectors, there
must be no provision of such things as technical assistance, construction, brokering or services
relating to engineering.616 These measures are to last, according to the latest extension, until 23
June 2019.617
As stated above, a certain set of economic sanctions have also been placed on Russia by
the European Union as a result of the conflict in East Ukraine. These were first contained in the
Council Decision 2014/512/CFSP and Council Regulation No 833/2014 of 31 July 2014 on

612
Council Decision 2014/145/CFSP of 17 March 2014 concerning restrictive measures in respect of actions
undermining or threatening the territorial integrity, sovereignty and independence of Ukraine,
Document 02014D0145-20171121,https://eur-lex.europa.eu/eli/dec/2014/145(1)/2017-11-21 (Accessed 2018.06.20)
613
Ibid.
614
European Council/Council of the European Union: EU restrictive measures in response to the crisis in Ukraine,
http://www.consilium.europa.eu/en/policies/sanctions/ukraine-crisis/, (Accessed 2018.06.20)
615
Council Regulation (EU) No 692/2014 of 23 June 2014 concerning restrictions on the import into the Union of
goods originating in Crimea or Sevastopol, in response to the illegal annexation of Crimea and Sevastopol, OJ L 183,
24.6.2014, p. 9–14, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014R0692 (Accessed
2018.06.08).
616
European Union News Room: EU sanctions against Russia over Ukraine,
https://europa.eu/newsroom/highlights/special-coverage/eu-sanctions-against-russia-over-ukraine-crisis_en
(Accessed 2018.06.08)
617
European Council/Council of the European Union: EU restrictive measures in response to the crisis in Ukraine,
i.m.

115
restrictive measures in view of Russia's actions destabilising the situation in Ukraine, 618 which
aims specifically at economic sectoral cooperation and exchanges with Russia (this was later
modified in September 2014 with the Council Decision 2014/659/CFSP 619 and Council Regulation
(EU) No 960/2014).620 These restrictive measures are the limiting of certain Russian companies
and banks to the European Union’s primary and secondary capital markets; the imposition of an
export and import ban on arms trading; the establishment of ban on exports for dual-use items for
the purpose of military use or military end users in the Russian Federation; and to restrict Russia’s
access to certain technologies and services which could be utilized for the purpose of both oil
production and exploration.621 The economic sanctions are currently extended until 31 January
2019.622 A critical element of these sets of sanctions is that, according to a decision taken by
European Union leaders in March 2015, any future lifting is to be directly connected to Russia
implementing the terms of the Minsk Accords.623
Another development in connection to events in East Ukraine relates to the elections held
on November 11 2018 in the Donbass by separatist administrations, the results of which were not
recognized by the European Union. 624 In response to this development individuals involved in the
organization of the elections have also been sanctioned by the European Union.625
The imposition of sanctions as a tool available in the practice of European Union external
relations can be said to be an example of neofunctionalism, with the handing over of nation states’

618
Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia's actions
destabilising the situation in Ukraine, OJ L 229, 31.7.2014, p. 1–11, https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=uriserv:OJ.L_.2014.229.01.0001.01.ENG (Accessed 2018.06.20)
619
Council Decision 2014/659/CFSP of 8 September 2014 amending Decision 2014/512/CFSP concerning restrictive
measures in view of Russia's actions destabilising the situation in Ukraine, OJ L 271, 12.9.2014, p. 54–57, https://eur-
lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:32014D0659 (Accessed 2018.06.20)
620
Council Regulation (EU) No 960/2014 of 8 September 2014 amending Regulation (EU) No 833/2014 concerning
restrictive measures in view of Russia's actions destabilising the situation in Ukraine, OJ L 271, 12.9.2014, p. 3–7,
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014R0960 (Accessed 2018.06.20).
621
European Council/Council of the European Union: EU restrictive measures in response to the crisis in Ukraine
i.m.
622
Ibid.
623
European Union External Action (2017): EU restrictive measures in response to the crisis in Ukraine, 16 March
2017,https://eeas.europa.eu/headquarters/headquartershomepage_en/8322/EU%20restrictive%20measures%20in%2
0response%20to%20the%20crisis%20in%20Ukraine; (Accessed 2018.06.20)
624
Radio Free Europe/Radio Liberty (2018): EU again condemns ’Elections’ In Separatist-Held Parts of Ukraine, 10
November 2018, https://www.rferl.org/a/eu-again-condemns-elections-in-separatist-held-parts-of-
ukraine/29593147.html (Accessed 2018.11.19)
625
JOZWIAK, Rikard (2018): EU Blacklists Nine People Over Ukraine Separatist Vote, Radio Free Europe/Radio
Liberty, 10 December 2018, https://www.rferl.org/a/eu-blacklists-nine-people-over-ukraine-separatist-
vote/29647964.html,(Accessed 2019.02.16)

116
powers to the supranational level. 626 However, at the same time, evidence of intergovernmentalism
can also been, with it having been argued that despite the fact that on a supranational level the
European Union has gained more power in this area, still the Member States also maintain a certain
control over the procedure.627 Additionally, for restrictive measures to be implemented, the
European Council must adopted the decision unanimously. 628 Thus, the example of the European
Union’s restrictive measures against Russia can be said to support the idea of both the
intergovernmental and neofunctionalist models being at work, as they involve Member States
agreement to the sanctions, but at the same time these have continued to be maintained and
successively renewed, despite the scepticism, which shall be examined below, that exists in many
sectors of the European Union with regards to the restrictive measures regime.

4.3 Russia’s Response

In response to the restrictive measures, Russia also implemented a range of measures of its own
against the European Union, which included prohibiting the importing of certain kinds of
agricultural products, raw materials and foodstuffs from Member States.629 These were first
brought into force by a presidential decree on 6 August 2014, and then were extended several
times, the last occasion being in 2017, which prolonged these economic measures until the end of
2018.630 Another development as a result of the European Union’s sanctions against Russia is what
has been termed the latter’s “pivot to Asia”, which refers to country attempting something of a
reorientation of its economy focusing on strengthening ties with Asian nations in order to
compensate losses in European markets.631 A particularly important aspect of this reorientation is

626
BARBOU DES COURIERES, Constance, (2017):Between Supranationalism and Inter-Governmentalism in the
European Union’s Foreign Policy: A Principle-Agent Approach of the Sanction Policy in the CFSP Framework,
Revista UNISCI/UNISCI Journal, No 43, January 2017, 9, https://www.ucm.es/data/cont/media/www/pag-
91857/UNISCIDP43-1BARBOU.pdf (Accessed 2019.02.17)
627
Ibid.
628
Ibid, 19; European Council/Council of the European Union: Adoption and review procedures for EU sanctions,
https://www.consilium.europa.eu/en/policies/sanctions/adoption-review-procedure/ (Accessed 2019.02.17)
629
Decree of the President of the Russian Federation (2014): On the application of certain special economic measures
to ensure the security of the Russian Federation, 6 August 2014, No. 560, Unofficial Translation,
https://ec.europa.eu/food/sites/food/files/safety/docs/ia_eu-russia_ru-eu-import-ban_20140806_unoff-trans-en.pdf,
(Accessed 2018.06.20)
630
President of Russia (2017): Executive Order on extending special economic measures to ensure Russia’s security,
30 June 2017, http://en.kremlin.ru/acts/news/54912, (Accessed 2018.06.22)
631
The Economist (2016): Russia’s pivot to Asia, 26 November 2016,
https://www.economist.com/asia/2016/11/26/russias-pivot-to-asia, (Accessed 2018.06.22)

117
the strengthening of relations with China. One observable manifestation of this has been a certain
trade reorientation away from the European Union towards China. 632 In 2015 China and Russia
agreed that they would bring about a harmonisation of the Belt and Road Initiative and the Eurasian
Economic Union, 633 and later in May 2018 China and the Eurasian Economic Union (which shall
be explored in the last chapter of the dissertation) signed a free trade agreement. 634 It was
acknowledged that the member states of the EAEU have an interest in entering the Asian market
due to its importance in the global economic system. 635 Furthermore, Russian President Vladimir
Putin has stated in relation to China’s One Belt, One Road Initiative that "We find it a useful,
important and promising initiative. This initiative is developing both with our efforts on building
the Eurasian economic union…”636

4.4 The Court of Justice of the European Union and the European Union’s Restrictive
Measures Regime

The implemention of the abovementioned restrictive measures has been challenged by various
Russian entities and individuals that have been targeted and affected by them. This has led to cases
coming before the Court of Justice of the European Union, both at the level of the European Court
of Justice and the General Court of the European Union. These shall be examined here, and it shall
be seen that these have caused this particular institution of the European Union to further involve
itself in the articulation of the nature and scope of the European Union’s external action and
relations with third countries.

632
HAVLIK, Peter (2018): Trade reorientation in Russia: will China replace the EU?, The Vienna Institute for
International Economic Relations, 10 July 2018, https://wiiw.ac.at/trade-reorientation-in-russia-will-china-replace-
the-eu--n-327.html (Accessed 2019.04.13)
633
PAIKIN, Zachary (2019): Russia’s pivot to the east: Where does it leave the EU?, European Council on Foreign
Relations, 21 February 2019,
https://www.ecfr.eu/article/commentary_russias_pivot_to_the_east_where_does_it_leave_the_eu (Accessed
2019.04.13)
634
SHIRA, Dezan & Associates (2018): China to Sign Free Trade Agreement with Eurasian Economic Union on
May 17, China Briefing, 15 May 2018, https://www.china-briefing.com/news/china-sign-free-trade-agreement-
eurasian-economic-union-may-17/ (Accessed 2019.04.02)
635
Eurasian Economic Commission (2018): Agreement signed on trade and economic cooperation between EAEU
and PRC, 17 May 2018, http://www.eurasiancommission.org/en/nae/news/Pages/17-05-2018-5.aspx (Accessed
2019.04.02)
636
Sputnik News (2018): Russia Considers China’s ‘One Belt, One Road’ Initiative Important, Promising, 6 June
2018, https://sputniknews.com/asia/201806061065142987-russia-china-one-belt-one-road/ (Accessed 2019.04.02)

118
 The Court of Justice of the European Union’s jurisdiction in relation to the European
Union’s external relations is found in the treaties. According to Article 24(1) of the TEU, with
regards to the common foreign and security policy, ʺThe Court of Justice of the European Union
shall not have jurisdiction with respect to these provisions, with the exception of its jurisdiction to
monitor compliance with Article 40 of this Treaty and to review the legality of certain decisions
as provided for by the second paragraph of Article 275 of the Treaty on the Functioning of the
European Union”. Article 275 of the TFEU states that „The Court of Justice of the European
Union shall not have jurisdiction with respect to the provisions relating to the common foreign
and security policy nor with respect to acts adopted on the basis of those provisions. However, the
Court shall have jurisdiction to monitor compliance with Article 40 of the Treaty on European
Union and to rule on proceedings, brought in accordance with the conditions laid down in the
fourth paragraph of Article 263 of this Treaty, reviewing the legality of decisions providing for
restrictive measures against natural or legal persons adopted by the Council on the basis of
Chapter 2 of Title V of the Treaty on European Union.”637
A major case which has come before the European Court of Justice in relation to the
European Union’s restrictive measures regime against Russia is C-72/15 involving Rosneft.638
Rosneft is Russia’s biggest gas and oil company, 639 and JSC Rosneftegaz, which is owned by the
Russian state, has a majority ownership of the company. 640 According to Decision 2014/512 and
Regulation No 833/2014,641 Roseneft is also subject to certain aspects of the restrictive measures
regime implemented by the European Union. 642 Roseneft challenged the validity of these
measures, bringing an action to the General Court of the European Union on 9 October 2014 and
on 20 November 2014 launched a judicial review application to the High Court of Justice (England

637
Article 40 of the TEU states that „The implementation of the common foreign and security policy shall not affect
the application of the procedures and the extent of the powers of the institutions laid down by the Treaties for the
exercise of the Union competences referred to in Articles 3 to 6 of the Treaty on the Functioning of the European
Union. Similarly, the implementation of the policies listed in those Articles shall not affect the application of the
procedures and the extent of the powers of the institutions laid down by the Treaties for the exercise of the Union
competences under this Chapter”.
638
Case C-72/15, PJSC Roseneft Oil Company v Her Majesty’s Treasury and Others, Judgement of the Court,
ECLI:EU:C:2017:236, 28 March 2017, paragraph 31,
http://curia.europa.eu/juris/document/document.jsf?text=&docid=189262&pageIndex=0&doclang=EN&mode=lst&
dir=&occ=first&part=1&cid=7819495 (Accessed 2019.04.02)
639
Rosneft: Roseneft at a glance, https://www.rosneft.com/about/Rosneft_today/ (Accessed 2019.02.04)
640
Rosneft: Shareholder structure, https://www.rosneft.com/Investors/Equity/Shareholder_structure/ (Accessed
2019.02.04)
641
Rosneft is mentioned in Annex III.
642
Case C-72/15, i.m., paragraph 31.

119
and Wales), Queen’s Bench Division (Divisional Court).643 With regards to the latter action,
Rosneft claimed that the Council’s restrictive measures and the accompanying national measures
required to implement them were not valid. 644
The High Court of Justice (England and Wales) made a request for a preliminary ruling to
the European Court of Justice, and in fact, one of the matters raised by the High Court of Justice
was whether in such a case the European Court of Justice has the ability to provide a preliminary
ruling according to Article 267 of the TFEU.645 In fact, there has been some uncertainty as to
whether the European Court of Justice has the jurisdiction to determine in a prelimary ruling the
validity of such sanctions.646 The UK, Czech Republic, Estonia, France, and Poland and the
Council had also argued that it is not within the jurisdiction of the Court to provide a preliminary
ruling on the validity of Decision 2014/512.647 The European Court of Justice ruled that it indeed
did possess the jurisdiction to provide preliminary rulings in such a situation relating to the CFSP,
in relation to Decision 2014/512, so long as the ruling relates to either monitoring whether the
decision complies with Article 40 TEU, or the review of whether restrictive measures placed on
natural or legal persons are legal.648
Beyond this issue, the High Court of Justice also asked whether the relevant measures of
Regulation No 833/2014 and Decision 2014/52 were valid. 649 These place restrictions on certain
kinds of financial transactions, as well as on the exporting of various technologies and goods of a
sensitive nature.650 Additionally, restrictions are placed on various Russian entities accessing the
capital market, and prohibiting service provision necessary for certain kinds of oil transactions. 651
The European Court of Justice found that in fact the restrictive measures implemented by the
European Union are valid. 652 Rosneft had employed the argument, among others, that the measures

643
Ibid, paragraph 32.
644
Ibid.
645
Paragraph 38(1).
646
JOHANSEN, Stian Øby (2017): Judicial control of EU foreign policy: the ECJ judgment in Rosneft, EU Law
Analysis, 29 March 2017, http://eulawanalysis.blogspot.com/2017/03/judicial-control-of-eu-foreign-policy.html
(Accessed 2019.04.16)
647
Case C-72/15, i.m., Paragraph 58.
648
Ibid, Paragraph 81.
649
Ibid, Paragraph 38(2)(a).
650
Judgment in Case C-72/15 The Queen, on the application of PJSC Rosneft Oil Company, formerly OJSC Rosneft
Oil Company v Her Majesty’s Treasury, Secretary of State for Business, Innovation and Skills and The Financial
Conduct Authority Press Release No 34/17, Luxembourg, 28 March 2017,
https://curia.europa.eu/jcms/upload/docs/application/pdf/2017-03/cp170034en.pdf (Accessed 2019.04.18)
651
Ibid.
652
C-72/15, i.m., Paragraph 197(2).

120
were in contravention of certain provisions of the EU-Russia Partnership and Cooperation
Agreement,653 and also in relation to that fact that Member States are obligated to enforce penalties
so as to ensure that Decision 2014/52 and Regulation No 833/2014 are implemented, it was argued
that these lack clarity with regards to their various provisions, which thus goes against both the
principles of legal certainty and nulla poena sine lege certa.654
The Court rejected these arguments. With regards to Rosneft’s argument that the measures
contradicted the Partnership and Cooperation Agreement, the Court stated that according to Article
99(1)(d) of that agreement, no party is prevented from implementing measures which it deems
necessary to protect its own security, in particular during times of military conflict or tension in
the international arena. 655 It was also emphasized by the Court that in relation to the issue of
whether the adoption of the restrictive measures was a necessity for safeguarding the European
Union’s fundamental security interests, that indeed the Council of the European Union has a broad
discretion with regards to political, economic and social choices.656 In relation to the other
argument raised the Court stated that the principles of legal certainty and nulla poena sine lege
certa does not prohibit a Member State from the imposition of criminal penalties in the case of an
infringement of the relevant provisions, even before the Court of Justice of the European Union
has had the possibility to clarify the scope of the provisions of Regulation 833/2014 and the
associated criminal penalties.657
In addition, other cases have come before the Court of Justice of the European Union,
specifically the General Court of the European Union. One of these was the judgment of the
General Court in Case T-262/15, Dmitrii Konstantinovich Kiselev v Council of the European
Union. The case involved Dmitrii Konstantinovich Kiselev, who was included on the list of those

653
It should also be noted that in the Case C-265/03, Judgment of the Court (Grand Chamber) of 12 April 2005, Igor
Simutenkov v Ministerio de Educación y Cultura and Real Federación Espanola de Fútbol, European Court Reports
2005 I-02579, Paragraph 29 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62003CJ0265
(Accessed 2019.05.31), where it was ruled that Article 23(1) of EU-Russia Partnership and Cooperation Agreement
(this states that “Subject to the laws, conditions and procedures applicable in each Member State, the Community
and its Member States shall ensure that the treatment accorded to Russian nationals, legally employed in the
territory of a Member State shall be free from any discrimination based on nationality, as regards working
conditions, remuneration or dismissal, as compared to its own nationals”) has direct effect, thus allowing
individuals to whom it is applicable to be able to rely on it Member States’ courts.
654
C-72/15, i.m., Paragraph 35.
655
Ibid, Paragraph 111.
656
Ibid, Paragraph 113.
657
Ibid, Paragraph 197(2).

121
individuals subject to restrictive measures by the European Union. 658 Kiselev is a Russian
journalist, who is also head of Rossiya Segodnya, a state-owned news agency. 659 The reason why
measures were placed on him by the Council was due to his role in Rossiya Segodnya and as a
result of the statements that he made in his capacity as a journalist, with the Council considering
him a „a central figure of the Russian government propaganda supporting the deployment of
Russian forces in Ukraine”.660 In response to the measures, one of the major foundations of
Kiselev’s argument, as in the Rosneft case, that the restrictive measures placed on him contravened
EU-Partnership and Cooperation Agreement, specifically the prohibition that it places on
restricting the free movement of capital between the European Union and the Russian
Federation.661 The Court found, as in the Rosneft case, that according to Article 99(1)(d) of the
Partnership and Cooperation Agreement the European Union had the right to institute its resrictives
measures, in this case including against Kiselev. 662
Another important aspect of Kiselev’s argument was that sanctions violated the right to
freedom of expression contained in Article 11 of the Charter of Fundamental Rights of the
European Union and Article 10 of the Convention for the Protection of Human Rights and
Fundamental Freedoms. 663 The Court ruled that the Council was justified in having considered that
the applicant had engaged in propaganda activities in support of Russia’s actions in Ukraine, and
that the restrictive measures placed on him were not „disproportionate restriction of his right to
freedom of expression”.664
Later, on 13 September 2018 the General Court handed down judgements in the cases of
T-715/14 Rosneft and Others v Council, T-732/14 Sberbank of Russia v Council, T-734/14 VTB
Bank v Council, T-735/14 Gazprom Neft v Council, T-737/14 Vnesheconombank v Council, T-

658
Case T-262/15, Judgment of the General Court (Ninth Chamber) of 15 June 2017 Dmitrii Konstantinovich
Kiselev v Council of the European Union,
http://curia.europa.eu/juris/document/document.jsf;jsessionid=5C8E2B41EB99446D9091444138137687?text=&doc
id=191802&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=27398 (Accessed 2019.05.24)
659
MIADZVETSKAYA, Yuliya (2018): How to draw a line between journalism and propaganda in the information
wars era? Case note on the Judgment of the General Court of 15 June 2017 in Case T-262/15 Dimitri
Konstantinovich Kiselev v Council of the European Union, College of Europe, Department of European Legal
Studies, Case Notes 02/2018, https://www.coleurope.eu/fr/research-paper/how-draw-line-between-journalism-and-
propaganda-information-wars-era (Accessed 2019.05.24)
660
Case T-262/15, i.m, Paragraphs 44, 45.
661
Ibid, Paragraphs 26, 28.
662
Ibid, Paragraph 34.
663
Ibid, Paragraph 54.
664
Ibid, Paragraphs 111, 112.

122
739/14 PSC Prominvestbank v Council, T-798/14 DenizBank v Council, and T-799/14 Gazprom
Neft v Council. All these cases involved Russian banks, oil and gas companies who had restrictive
measures placed on them by the Council, and the Court upheld the measures that were adopted by
the Council. 665 The Court affirmed, as in the Rosneft case, that it has the authority to determine the
legality of the contested restrictive measures.666 These cases also addressed the abovementioned
issue of the European Union-Russia Partnership and Cooperation Agreement, and quoted the
above analysed Rosneft judgment, saying that this case has already settled the question as to
whether or not the relevant restrictive measures are compatiable with the Partnership and
Cooperation Agreement.667 The General Court also made reference to the earlier discussed Article
21 TEU in relation to this case, saying that the restrictive measures aim to “increase the costs of
Russia’s action” in Ukraine and the promotion of a “peaceful settlement of the crisis”.668 The
Court ruled that such an aim is in line with an objective is consistent with the objectives contained
in Article 21 TEU, which include maintenance of both international security and peace.669
The cases discussed above illustrate the importance of the institution of the Court of Justice
of the European Union in relation to the development and articulation of the European Union’s
external relations policies and actions. They are also of interest from the point of view that the
conflict between Russia and Ukraine and its subsequent repurcussions for the European Union
have, in addition to various political, security and economic ramifications, also played a role in
helping to articulate and confirm the powers of the Court of Justice of the European Union with
regards to the EU’s external relations dimension. For example, it has been observed that a
particularly important element of the Rosneft case, is that it provides clarification in relation to the
Court of Justice of the European Union’s jurisdiction with regards to the Common Foreign and
Security Policy of the European Union, and that it is an integral component of the legal order of

665
Court of Justice of the European Union (2018): General Court of the European Union PRESS RELEASE No
132/18 Luxembourg, 13 September 2018 Judgments in Cases T-715/14 Rosneft and Others v Council, T-732/14
Sberbank of Russia v Council, T-734/14 VTB Bank v Council, T-735/14 Gazprom Neft v Council, T-737/14
Vnesheconombank v Council, T-739/14 PSC Prominvestbank v Council, T-798/14 DenizBank v Council, and T-
799/14 Gazprom Neft v Council, https://curia.europa.eu/jcms/upload/docs/application/pdf/2018-09/cp180132en.pdf
(Accessed 2019.04.20)
666
Ibid, 1.
667
Ibid.
668
Ibid.
669
Ibid.

123
the European Union.670 Furthermore, the cases have allowed the Court to provide clarification with
regards to the character of the EU-Russia Partnership and Cooperation Agreement, an agreement
which still provides the basis of the legal relationship between the European Union and Russia.

4.5 Possibility of Lifting the Sanctions

It is undeniable that relations between the European Union and the Russian Federation have been
greatly strained as a result of events in Ukraine and subsequent actions that have been taken in
response to this, including substantial economic loss for both sides, including a decrease in
interaction and an increase in the costs of doing business. 671 Russian President Vladimir Putin
said on a state visit to Austria in June 2018 in relation to the sanctions that "These actions are
harmful for everyone, both for those who initiate them and for those against whom they are
directed” and that "Everybody has an interest in getting the sanctions lifted, us too".672 Certain
voices from within the European Union have also voiced the opinion that there should be a lifting
of the sanctions. For example, Hungarian Foreign Minister Péter Szijjártó stated in January 2017
that as a result of sanctions placed on Russia by the European Union, Hungary had lost around 6.5
billion USD over the previous 3 years. 673 Greece had also expressed a similar opinion in the past,
when the then recently elected SYRIZA government delayed its consent to the prolonging of EU
sanctions against separatists in Easter Ukraine, 674 though in the end, it agreed with the other 27

670
VAN ELSUWEGE, Peter (2017): Judicial Review of the EU’s Common Foreign and Security Policy: Lessons
from the Rosneft case, Verfassungsblog, 6 April 2017, https://verfassungsblog.de/judicial-review-of-the-eus-
common-foreign-and-security-policy-lessons-from-the-rosneft-case/ (Accessed 2019.04.05)
671
TIMOFEEV, Ivan (2014): ’From Lisbon to Vladivostok’ at risk, Russia Direct, December 11 2014,
http://www.russia-direct.org/opinion/lisbon-vladivostok-risk, (Accessed 2017.08.2)
672
BBC News (2018): Vladimir Putin: Western sanctions ’harmful for everyone’, 5 June 2018,
https://www.bbc.com/news/world-europe-44364429, (Accessed 2018.06.22)
673
Ministry of Foreign Affairs and Trade (2017): Hungary lost USD 6.5 billion due to sanctions against Russia,
January 24 2017, Website of the Hungarian Government, http://www.kormany.hu/en/ministry-of-foreign-affairs-and-
trade/news/hungary-lost-usd-6-5-billion-due-to-sanctions-against-russia, (Accessed 2018.06.22) He also expressed
the opinion that the political or economic goals of the sanctions have not been successful, with Russia having not been
brought to “its knees economically” and furthermore, that it has brought harm to the economies of the European Union
Member States, all while little progress has been made in relation to the Minsk agreement. (REID, David –
CUTMORE, Geoff (2017): Sanctions on Russia don’t work, says Hungary’s foreign minister, 4 October 2017, CNBC,
https://www.cnbc.com/2017/10/04/russian-sanctions-dont-work-says-hungary.html, (Accessed 2018.06.22))
674
TRAYNOR, Ian (2015): Greece delays EU agreement on Russia sanctions, The Guardian,
https://www.theguardian.com/world/2015/jan/29/greece-delays-eu-agreement-russia-sanctions, (Accessed
2018.06.22)

124
Member States and voted in favour of the sanctions. 675 Italy’s then newly appointed Prime
Minister, Giuseppe Conte on 5 June 2018, called for sanctions placed on Russia to be reviewed,676
saying that his government would advocate “an opening towards Russia”.677 There have also been
vocal sectors from German political and economic life that have questioned the continuation of
the sanctions.678 In February 2018 the then German Foreign Minister Sigmar Gabriel said that it
was “not realistic” that there be no sanctions relief before the full implementation of the Minsk
Accords.679 Though he acknowledged that this opinion went against the official line, which holds
that the full implementation of the Minsk accords are required in order for the sanctions to be
lifted.680
However, it can be said that up until this point of time, despite voices of discontent with
regards to the maintenance of sanctions against Russia, no Member State has pushed this issue to
the point of causing major tension or conflict within the European Union. Despite such opinions
be expressed by important figures such as Sigmar Gabriel from within Germany, Chancellor
Angela Merkel has reiterated that the European Union will lift sanctions only in the case that the
conditions of the Minsk Accords are fulfilled. 681 Furthermore, despite the above statements,
countries such as Italy, Hungary, and Greece have not opposed the various extensions of the
European Union sanctions, and thus, in practice, European Union unity on this matter has been
maintained. 682

675
HIGGINS, Andrew (2015): Greece Steps Back Into Line With European Union Policy on Russia Sanctions The
New York Times, January 29 2015 , https://www.nytimes.com/2015/01/30/world/europe/european-union-russia-
sanctions-greece.html, (Accessed 2018.06.22)
676
Euractiv (2018): New Italian Prime Minister takes aim at migrants, austerity, in maiden speech, 6 June 2018,
https://www.euractiv.com/section/elections/news/new-italian-prime-minister-takes-aim-at-migrants-austerity-in-
maiden-speech/, (Accessed 2018.06.22)
677
Ukrinform (2018): Italian Prime Minister stands for review of sanctions against Russia, 6 June 2018,
https://www.ukrinform.net/rubric-polytics/2474595-italian-prime-minister-stands-for-review-of-sanctions-against-
russia.html, (Accessed 2018.06.22)
678
GODLEWSKI, Andrzej (2017): Germany is fed up with sanctions against Russia, Central European Financial
Observer, 15 November 2017, https://financialobserver.eu/cse-and-cis/russia/germany-is-fed-up-with-sanctions-
against-russia/, (Accessed 2018.06.22)
679
SHALAL, Andrea (2018): Ukraine progress should soften sanctions on Russia – Germany’s Gabriel, 17 February
2018, Reuters, https://uk.reuters.com/article/uk-germany-security-ukraine-crisis-gabri/ukraine-progress-should-
soften-sanctions-on-russia-germanys-gabriel-idUKKCN1G10AB, (Accessed 2018.06.22)
680
Ibid.
681
KROET, Cynthia (2017): Merkel: EU will lift Russia sanctions when Minsk accords implemented, Politico, 5
February 2017, https://www.politico.eu/article/merkel-eu-will-lift-russia-sanctions-when-minsk-accords-
implemented/, (Accessed 2018.06.25)
682
RETTMAN, Andrew (2018): Lone Italy fails to stop Russia sanctions, Euobserver, 29 June 2018,
https://euobserver.com/foreign/142236, (Accessed 2018.06.25)

125
 It can be said that it is difficult to predict the ultimate duration of the restrictive measures
placed on the Russian Federation by the European Union due to the various complex factors
relating to the relevant issues. In any case, the adoption by the European Union of restrictive
measures as a result of events in Crimea and East Ukraine against the Russian Federation is a
notable and striking example of the utilization of certain tools of external relations policy available
to it in relation to its dealings with third countries. As has been seen, there has been scepticism
from various European Union Member States with regards to the restrictive measures and calls for
the easing or lifting of the sanctions, as they feel that they are detrimental to their various interests.
However, despite this very real scepticism, the EU has continued to present a united front in both
the initial placing of the restrictive measures regime, and also in the continuation and renewal of
these sanctions.

126
 CHAPTER 5

THE EURASIAN ECONOMIC UNION, THE EUROPEAN UNION AND UKRAINE

5.1 Overview of the Eurasian Economic Union’s Formation

With the collapse of the Soviet Union, a single, deeply integrated economic, political and
institutional legal space was separated into 16 different states.683 Prior to the creation of the
Eurasian Economic Union there had been various attempts at forming international organizations
in order to reintegrate this post-Soviet space, the first being the Commonwealth of Independent
States (CIS).684 The CIS, though helping to maintain certain links between former Soviet
territories, through such mechanisms as the mobility of labour and visa-free travel, was unable to
put forward a clear project for an integrated political and economic community. 685 It is generally
acknowledged that the modern thrust towards Eurasian686 integration began with a speech made in
1994 by Kazakh President Nursultan Nazarbayev at the Lomonosov Moscow State University. 687
Following this, in 1995 the Russian Federation, Belarus and Kazakhstan signed an Agreement on
the Customs Union, the aim of which was to remove trading barriers and encourage the economic
integration of these states.688
Later came the Eurasian Economic Community, formed in 2000 by Belarus, Kazakhstan,
Kyrgyzstan, Russia, Tajikistan and Uzbekistan, the aim of which was promote the creation of a
single economic space and customs union among these signatory states.689 Next, the Eurasian
Customs Union was formed in 2010, its original members being Belarus, Kazakhstan and Russia,

683
ATLIGAN, Canan - BAUMANN, Gabriele - BRAKEL, Alexander - CRAWFORD, Claudia - DEVCIC, Jakov -
HELMS, Amos (2014): The Eurasian Union: An Integration Project Under the Microscope, Konrad Adenauer Stiftung
International Reports, 2/2014, 8, http://www.kas.de/wf/doc/kas_36785-544-2-30.pdf?140207134233, (Accessed
2017.08.08)
684
Ibid.
685
SAKWA (2015): i.m.
686
The term “Eurasia” itself is open to different interpretations and definitions, based on different geopolitical
preconceptions. Speaking in terms of purely physical geography, it may be defined as the landmass between the
Atlantic and the Pacific oceans. In terms of geopolitics, it usually refers to the lands of the former Soviet Union,
excluding the three Baltic states. See LIIK, Kadri (2014): Introduction: Russia’s pivot to (Eur)asia. In Russia’s Pivot
to Eurasia, European Council on Foreign Relations, May 2014, 6, http://www.ecfr.eu/page/-
/ECFR103_RUSSIA_COLLECTION_290514_AW.pdf (Accessed 2017.08.08)
687
Eurasian Economic Commission (2015): Eurasian Economic Integration: Facts and Figures,6,
http://www.eurasiancommission.org/en/Documents/broshura26_ENGL_2014.pdf (Accessed 2017.08.08)
688
Ibid.
689
VOUSINAS, Georgios L (2014): Eurasian Economic Community: Towards Integration. Economic Challenges and
Geostrategic Aspects. Modern Economy, (5), 951. http://dx.doi.org/10.4236/me.2014.59088, (Accessed 2017.08.08)

127
with it at the time being seeing as the foundation stone for a future “Eurasian Union”.690 After, the
Single Economic Space or Eurasian Economic space came into being in 2012. 691
It is undeniable that Russia has provided the main impetus behind attempts to reintegrate
the post-Soviet area.692 Russian President Vladimir Putin himself has described the collapse of the
Soviet Union as “the biggest geopolitical catastrophe of the century”.693 In 2011, President Putin
published an article in Izvestia where he set out his vision for a Eurasian Union. Drawing explicitly
from the example of the European Union, he stated that “It took Europe 40 years to move from the
European Coal and Steel Community to the full European Union. The establishment of the
Customs Union and the Common Economic Space is proceeding at a much faster pace because
we could draw on the experience of the EU and other regional associations. We see their strengths
and weaknesses. And this is our obvious advantage since it means we are in a position to avoid
mistakes and unnecessary bureaucratic superstructures.”694 Furthermore, drawing again from the
example of the EU, he stated that, “In fact, we are adapting the experience of the Schengen
Agreement that benefits Europeans as well as everyone who comes to work, study, or holiday in
the EU”.695 Furthermore, in Putin’s stated vision of Eurasian Union, the creation of such a union
is seen as a stepping stone for a greater integration project with the European Union, “…take the
two largest associations on our continent – the European Union and the Eurasian Union currently
under construction. In building cooperation on the principles of free trade rules and compatible
regulation systems they are in a position to disseminate these principles, including through third
parties and regional institutions, all the way from the Atlantic to the Pacific Oceans. They will
thus create an area that will be economically harmonised, but that still will remain diverse when

690
DREYER, Iana - POPESCU Nicu (2014): The Eurasian Customs Union: The economics and the politics, European
Union Institute for Security Studies: Brief Issue, 1,
http://www.iss.europa.eu/uploads/media/Brief_11_Eurasian_Union.pdf, (Accessed 2017.08.08)
691
DRAGNEVA, Rilka – WOLCZUK, Kataryna (2017): The Eurasian Economic Union: Deals, Rules and the
Exercise of Power, Chatham House,
4,https://www.chathamhouse.org/sites/files/chathamhouse/publications/research/2017-05-02-eurasian-economic-
union-dragneva-wolczuk.pdf, (Accessed 2017.09.10)
692
KEMBAYEV, Zhenis (2016): The Court of the Eurasian Economic Union: An Adequate Body for Facilitating
Eurasian Integration? Review of Central and Eastern European Law 41, 343 .
693
BIGG, Claire (2005) Was Soviet Collapse Last Century’s Worst Geopolitical Catastrophe? RadioFreeEurope
Radio Liberty, April 29 2005, http://www.rferl.org/a/1058688.html, (Accessed 2017.09.10)
694
PUTIN, Vladimir (2011): A new integration project for Eurasia: The future in the making, Izvestia, October 4
2011,http://www.europarl.europa.eu/meetdocs/2009_2014/documents/dru/dv/dru_2013_0320_06_/dru_2013_0320_
06_en.pdf, (Accessed 2017.09.10)
695
PUTIN (2011): i.m.

128
it comes to specific mechanisms and management solutions.”696 In fact, President Putin has argued
that by joining the Eurasian Union, states would actually be aided in their broader push towards
European integration, having said that “Soon the Customs Union, and later the Eurasian Union,
will join the dialogue with the EU. As a result, apart from bringing direct economic benefits,
accession to the Eurasian Union will also help countries integrate into Europe sooner and from a
stronger position.”697
On May 29 2014 the Treaty on the Eurasian Economic Union was signed in Kazakhstan,
and on January 1 2015 it came into force.698 With the the signing of the Treaty, President Putin
said that “Today we are creating a powerful, attractive center of economic development, a big
regional market that unites more than 170 million people.”699 The member states of the Eurasian
Economic Union now include the Republic of Armenia, the Republic of Belarus, the Republic of
Kazakhstan, the Kyrgyz Republic, and the Russian Federation. 700

5.2 Main Objectives and Principles

The Preamble of the Treaty on the Eurasian Economic Union sets out the guiding principles of the
organization. It states that it is guided by such principles as states, unconditional respect for
constitutional rights and human freedoms, respect for the history, culture and traditions of different
peoples while at the same time seeking to deepen cooperation and solidarity between them. 701
According to the Treaty, the deepening of Eurasian integration serve the interests of signatory
states, aiming to bring about balanced development and economic progress.702 Additionally, it

696
Ibid.
697
Ibid.
698
DRAGNEVA – WOLCZUK (2017): i.m. 4.
699
MACFARQUHAR, Neil (2014): Russia and 2 Neighbors Form Economic Union That Has a Ukraine-Size Hole,
The New York Times, May 29 2014, https://www.nytimes.com/2014/05/30/world/europe/putin-signs-economic-
alliance-with-presidents-of-kazakhstan-and-belarus.html?_r=1, (Accessed 2017.09.10)
700
Eurasian Economic Union: General Information, http://www.eaeunion.org/?lang=en#about(Accessed 2017.10.10)
Previously there had been debate about Tajikistan joining the organization, with discussion with regards to the
Eurasian Economic Union’s enlargement focusing upon this country in particular. However, no real concrete steps
were taken in this direction, and in fact, now it has been proposed that the country rather be granted „observer” status
to the organization. See PUTZ, Catherine (2018): Tajikistan Still Considering Engagement With the Eurasian
Economic Union, The Diplomat, 23 April 2018, https://thediplomat.com/2018/04/tajikistan-still-considering-
engagement-with-the-eurasian-economic-union/ (Accessed 2018.08.22)
701
Treaty on the Eurasian Economic Union (Courtesy Translation),
http://www.un.org/en/ga/sixth/70/docs/treaty_on_eeu.pdf (Accessed 2017.06.06)
702
Ibid.

129
recognises and takes into account the World Trade Organisation’s rules, principles and
regulations, 703 as well as the United Nations Charter’s principles and objectives, as well as
universally recognised international law regulations and principles. 704 According to Part 1, Section
1, Article 1.1-2 of the Treaty, the signatory parties ensure the “free movement of goods, services,
capital and labour within its borders” and that “The Union shall be an international organisation
of regional economic integration and shall have international legal personality”.705

5.3 Institutional Structure

Section III, Article 8 of the Treaty sets out Bodies of the Union, which include the Supreme
Eurasian Economic Council, the Eurasian Intergovernmental Council, the Eurasian Economic
Commission and the Court of the Eurasian Economic Union. With regards to the Supreme Council,
according toArticle 10.1-2 of the Treaty it is the Eurasian Economic Union’s supreme Body, and
is made up of the heads of the various Member States. The Supreme Council has the responsibility
to deal with the Union’s main issues with regards to its activities, and to define its strategy,
prospects and direction in relation to the development of integration, and is to take decisions which
seek to achieve the Union’s objectives. According to Article 13.2, the Supreme Council’s decisions
and dispositions are to be adopted based on the principle of consensus. This principle is said to be
an acknowledgement of the sensibilities of certain member states, who wish to safeguard their
national sovereignty. 706 This concern even extends to the choice of the name Eurasian Economic
Union, which reflects the conception of the organization according to certain member states.
Kazakhstan’s first deputy prime minister and chief negotiator Bakytzhan Sagintayev stated that
“We are not creating a political organization; we are forming a purely economic union (…) It is

703
Ibid.
704
Ibid.
705
With regards to the Customs Union formed by the EAEU member states, Section VI sets out its “Principles of
Functioning”. Article 25 states that: 1. Within the Customs Union of the Member States: 1) an internal market for
goods shall be in place; 2) the Common Customs Tariff of the Eurasian Economic Union and other common measures
regulating foreign trade with third parties shall be applied; 3) a common trade regime shall be applied to relations
with third parties; 4) Common customs regulations shall be applied; 5) free movement of goods between the territories
of the Member States shall be ensured without the use of customs declarations and state control (transport, sanitary,
veterinary-sanitary, phytosanitary quarantine), except as provided for by this Treaty.
706
VICARI, Madalina (2016): The Eurasian Economic Union- approaching the economic integration in the post-
Soviet space by EU-emulated elements, Papers in Political Economy,
https://interventionseconomiques.revues.org/2823, (Accessed 2017.06.19)

130
a pragmatic means to get benefits. We don’t meddle into what Russia is doing politically, and they
cannot tell us what foreign policy to pursue.”707
According to the Treaty, in the case of conflict between the various above mentioned
institutions, the Supreme Economic Council decisions prevail over those of the Intergovernmental
Council and Economic Commission, while the Intergovernmental Council’s decisions prevail over
those of the Economic Commission. 708 The Commission has the objectives of enabling “the
functioning and development of the Union, as well as to develop proposals in the sphere of
economic integration within the Union.”709 Though there is a resemblance between the European
Union and European Economic Union’s institutional structure, there is a difference between them
in terms of their roles and importance with relation to decision-making and governance. As shall
be seen in the next section, it can thus be argued that the Eurasian Economic Union rather
resembles the intergovernmental model of governance rather more than the supranational model,
the latter being a major defining characteristic of the European Union.
With regards to the Court of the Union, Article 19.1 declares that “The Court of the Union
shall be a permanent judicial Body of the Union”. It aims to ensure the “uniform application by
the Member States and Bodies of the Union of the Treaty, international treaties within the Union,
international treaties of the Union with a third party and decisions of the Bodies of the Union”.
As to the language used by the Organization, Article 110.1 of the Treaty sets out that Russia
is the working language of the Bodies of the Eurasian Economic Union and Article 110.2 states
that the various international treaties within the Eurasian Economic Union itself and the binding
decisions of the Commission are to be adopted in the Russian language.

5.4 Nature of Eurasian integration

It is worth highlighting several important characteristics of Eurasian integration. It has been

acknowledged that the region covered by the EAEU has specific unique features that distinguish
it from the European Union and its experience of integration. For example, Eurasian integration is
occurring in a region which, in the fairly recent past, had been part of one united centralized

707
MACFARQUHAR (2014): i.m.
708
Article 6.4.
709
Annex 1, Article 1.1.

131
state.710 As a result, these states inherited important relationships among themselves when
attaining independence in such areas as the economy and infrastructure, sharing similar
institutions, a common cultural heritage and the use of the Russian language. 711 This last fact is
acknowledged in a provision in the Treaty on Eurasian Economic Union, which provides that
Russian is the working language of the organization’s institutions. 712 All this is an important
distinction from the history of the post-war European integration process, which involved states
possessing, with varying degrees, traditions of independent statehood, and which had not belonged
to a common, modern, centralized state or a common language community.
As has already been mentioned, over time there have been various models proposed
seeking to explain regional integration projects (in particular with regards to the European Union),
one of which is the intergovernmental model. 713 Despite the fact that the Eurasian Economic Union
possesses such supranational bodies as the Eurasian Economic Commission, the
intergovernmental model seems the most apt to describe the development and structure of the
Eurasian Economic Union. As already stated, this model emphasises the importance of national
governments in the integration process, and attributes less importance to the role of supranational
organisations.714 Evidence of this can be seen in the fact that the Supreme Eurasian Economic
Council retains control over the direction of EAEU policy and development, and that it adopts
decisions through a process of consensus, which are binding though only as far as they are in
harmony with the respective national laws of the states, and thus don’t take priority over national
law.715 Furthermore, if conflicts arise, the Supreme Council’s decisions have priority over both the
Commission and the Intergovernmental Council. 716 Thus, it can be said that integration takes place
rather at the highest governmental levels, rather than through the Commission.717 However, this
must also be partially qualified by the fact that by virtue of its very existence, including the

710
VINOKUROV, Evgeny (2018): Introduction to the Eurasian Economic Union, Palgrave Macmillan, Cham, 2018,
147.
711
Ibid, 149.
712
Article 110(1)
713
POLLACK, Mark. A (2015): „Theorizing EU Policy-Making”, In WALLACE, Helen - POLLACK, Mark. A -
YOUNG, Alasdair R. (eds.): Policy-Making in the European Union, Oxford, Oxford University Press, 14, 16.
714
Ibid, 16.
715
VINOKUROV (2018): i.m. 52.
716
Ibid.
717
JAROSIEWICZ, Aleksandra - FISCHER, Ewa (2015): The Eurasian Economic Union – more political, less
economic, 20 January 2015, OSW, https://www.osw.waw.pl/en/publikacje/osw-commentary/2015-01-20/eurasian-
economic-union-more-political-less-economic (Accessed 2018.08.10)

132
abovementioned institutions that have also been put into place, that a very real supranational
structure of some kind has been put into place and is infact developing, having been given certain
powers and competences. Furthermore, as seen by the statements of the Russian president, it has
been explicitly acknowledged that the model of the European Union provides a major part of the
inspiration for the Eurasian Economic Union model. Thus, it may in fact be argued that the creation
and promotion of this integration project in the Eurasian space is in fact, to a certain extent, an
example of the European Union institutional and economic model spreading beyond its own
borders, acting as a prototype for integration projects in other parts of the world. However, as has
already been discussed above, this is not to imply that the supranational institutions of the Eurasian
Economic Union have a similarly strong and definitive role as those of the European Union.

5.5 Ukraine and the Eurasian Economic Union

5.5.1 ‘Competing integration models’ – Ukraine between Europe and Russia

It can be said that the Eastern Partnership, with its program of signing Association Agreements
with post-Soviet states, which aims at integrating and tie third countries more closely to the
European Union, can act as an alternative to engaging with and joining the Eurasian integration
project its most recent incarnation being the Eurasian Economic Union. An inevitable issue which
arises in relation to the states caught between these two integration projects is whether it is in fact
possible to successfully balance between them, in the sense of somehow participating or engaging
with both to varying degrees and to a certain extent. There have been different points of view as
to how states who are the subjects of competition between these two large integration projects
could and should engage with both of them.
An attempt at pursuing a kind of multidimensional policy foreign policy has manifested
itself in different ways since the time that Ukraine attained independence. For example, the 1990
Declaration of State Sovereignty of Ukraine proclaimed that Ukraine would be “a permanently
neutral state”,718 and later the 1993 foreign policy document adopted by the Ukrainian parliament
advocated the principle that the country have a multidimensional foreign policy. 719 This at times
has involved developing connections to and, to a limited extent, participation in regional

718
Article IX, http://static.rada.gov.ua/site/postanova_eng/Declaration_of_State_Sovereignty_of_Ukraine_rev1.htm
719
LYUBASHENKO (2012): i.m. 90.

133
integration processes and projects in the post-Soviet space. For example, Ukraine was also one of
the founders of the Commonwealth of Independent States (CIS) in 1991, however it did not
become a full member of this organization as it did not subsequently agree to sign the CIS Charter,
and instead affirmed in the abovementioned 1993 foreign policy document its desire for European
integration.720 However, it still participated in the organization’s activities, such as sending
observers and voting representatives to CIS institutions, participated in summits, and even led the
CIS Council of the Heads of State on two occasions (2003 and 2014).721 Yet Ukraine can be said
to have attempted to limit its participation in the CIS to issues of a bilateral economic nature,
opposing attempts to turn the organisation into a federation or confederation. 722 This is illustrated
by the fact that Ukraine did not take part in the CIS Inter-Parliamentary Assembly which had been
agreed on in March 1992, nor did it participate in the Economic Court of the CIS which was created
some months later.723
In May 1993 the CIS issued a declaration which aimed to establish an economic union and
subsequently signed an Economic Union Treaty in September of that same year which sought to
bring into being a free trade area, which would have both reduced internal tariffs and created a
system of common external tariffs, as well as a payments and settlements system. 724 Ukraine
signed the joint declaration and even participated in the drafting of the framework treaty,
committing itself to this union, though finally it agreed to only be an associated member. 725
However, in the end this project did not come to fruition, with the agreement signed between this
union’s founding member states failing to be ratified by most of the CIS member countries. 726
Later, in January 1995 a Customs Union was established by Belarus, Kazakhstan and Russia,

720
FESENKO, Vladimir (2015): Ukraine: Between Europe and Eurasia. In DUTKIEWICZ, Piotr - SAKWA, Richard
eds: Eurasian Integration – The View from Within, Routledge, London and New York, 2015, 136.
721
MOLCHANOV, Mikhail A. (2015): Eurasian Regionalisms and Russian Foreign Policy, Ashgate: Surrey and
Burlington, 139.
722
KUZIO (1999): i.m. 56.
723
DRAGNEVA – WOLCZUK (2016): i.m. 683.
724
ZHALIMBETOVA, Roza - GLEASON, Gregory (2001): Eurasian Economic Community (EEC) Comes Into
Being, CACI Analyst, 6/20/2001, https://www.cacianalyst.org/publications/analytical-articles/item/7113-analytical-
articles-caci-analyst-2001-6-20-art-7113.html?tmpl=component&print=1 (Accessed 2018.08.10)
725
DRAGNEVA – WOLCZUK (2016): i.m. 684.
726
Ibid.

134
which was joined by Kyrgyzstan in 1996 and Tajikistan in 1999.727 Ukraine chose not to join due
to a fear that such a move would compromise the country’s sovereignty. 728
In 2002 Ukraine attained observer status to the Eurasian Economic Community, 729 which,
as mentioned above, came into being in 2000. In September 2004 Ukrainian President Leonid
Kuchma signed, along with Russia, Belarus and Kazakhstan, various agreements which were seen
as laying the foundation for the creation of a Single Economic Space (SES). 730 However, their
views as to what the SES would entail were at odds, with Russia aiming at the creation of a customs
union and single currency, whereas Ukraine rather preferred the creation of a free trade zone,
which would have been a looser form of integration than a customs union, and did not support the
idea of a monetary union, which would have posed problems for Ukraine’s European
integration.731
The coming to power of Viktor Yushchenko in 2005 in the wake of the Orange Revolution
saw a strongly pro-Western policy being pursued by Ukraine, and during his tenure Ukraine began
negotiating the details of a future Association Agreement and Deep and Comprehensive Free Trade
Area (DCFTA).732 Later, as already discussed earlier, Viktor Yanukovych pursued a policy of
balancing between Russia and the West, and after not not signing the Association Agreement with
the European Union was ousted as a result of the Euromaidan Revolution. In response to this
development, President Putin eventually signed Federal Law on Suspension by the Russian
Federation of the Agreement on the Free Trade Zone with Regard to Ukraine which suspended
from January 1 2016 the Agreement on the Free Trade Zone signed on October 18 2011 between
Russia and Ukraine. 733 A statement was made which said that this law came into being due to
the “coming into effect as of January 1, 2016, of the trade and economic section of the Association
Agreement between Ukraine and the European Union without any legally binding agreement that

727
BORODIN, Konstantin - STROKOV, Anton (2015): The Customs Union in the CIS, Journal of Economic
Integration, Volume 30, Number 2, June 2015, 339, https://www.e-
jei.org/upload/JEI_30_2_334_358_2013600073.pdf (Accessed 2019.02.17)
728
BRZEZINSKI, Zbigniew - SULLIVAN, Page (1997): Russia and the Commonwealth of Independent States:
Documents, Data, and Analysis, M.E. Sharpe: London and New York, 1997, x.
729
ZADOROZHNII, Oleksandr (2016): International Law in the Relations of Ukraine and the Russian Federation,
K.I.S: Kyiv, 130.
730
HANCOCK, Kahtleen J. (2009): Regional Integration: Choosing Plutocracy, Palgrave Macmillan: New York,
131.
731
Ibid, 131-132.
732
DRAGNEVA – WOLCZUK (2016): i.m., 689.
733
President of Russia (2015): Law on suspending free trade agreement with Ukraine, December 30 2015,
http://en.kremlin.ru/events/president/news/51131 (Accessed 2017.10.30)

135
would meet Russia’s interests. This fundamentally changed the circumstances that were of special
significance to Russia at the time the Free Trade Zone Agreement was signed”.734

5.5.2. Balancing the integration projects

There have been different points of view as to how Ukraine could have and should handle and
engage with the different integration projects that it has found itself having to choose from.

1. According to Article 39 of the Association Agreement signed between the European Union and
Ukraine, the AA does not preclude maintaining or establishing free trade areas, customs unions or
arrangements relating to frontier trade so long as these do not have the effect of altering the
Association Agreement’s arrangements. According to this, then, some may argue that,
theoretically, Ukraine could have adapted the terms and conditions of the Association Agreement
to Eurasian Customs Union.735 However, in reality, it was not possible to reconcile the two
different trade regimes represented by the EU and ECU, 736 due to the significant differences
between the two regimes that could not be solved as simply as by employing some form of
terminology adaptation.737 The then European Commission President, Jose Manuel Barroso, even
made a statement in relation to this very issue, having said that "Agreements on the establishment
of a deep and comprehensive free trade area between the EU and Ukraine contain obligations that
need to be fulfilled…Our positions were clearly defined... One country cannot at the same time be
a member of a customs union and be in a deep common free-trade area with the European Union.
This is not possible…"738

734
Ibid.
735
BROSE, Colin (2016): Serbia Maneuvers Between the EU and EEU, The Jamestown Foundation, November 11
2016, https://jamestown.org/serbia-maneuvers-eu-eeu/, (Accessed 2017.09.10)
736
Ibid.
737
SUSHKO, Oleksandr (2013): A Fork in the Road? Ukraine between EU Association and the Eurasian Customs
Union, PONARS Eurasia, Policy Memo 293, September 2013, http://www.ponarseurasia.org/memo/fork-road-
ukraine-between-eu-association-and-eurasian-customs-union#_ftn9, (Accessed 2018.01.4)
738
Ukrainform (2013): Barroso reminds Ukraine that Customs Union and free trade with EU are incompatible, 25
February 2013, https://www.ukrinform.net/rubric-economy/1461921-
barroso_reminds_ukraine_that_customs_union_and_free_trade_with_eu_are_incompatible_299321.html, (Accessed
2018.01.4)

136
2. However, there have been those that have attempted to find some arrangement or solution to
balance these various factors, perhaps adopting what some might describe as a more nuanced
approach. For example, Johannes Hahn, European Commissioner for European Neighbourhood
Policy and Enlargement Policy made the statement, with regards to a study739 exploring Ukraine’s
relations with both Russia and the European Union that “The study rightly recognises that
integration [for Ukraine] with Russia and EU are not in principle mutually exclusive. The study
goes on to suggest that at least partial restoration of links with Russia, and the so-called Eurasian
Economic Union will be important to Ukraine’s economic recovery, and that Ukraine should
diversify its export markets and develop trade relations in many directions…Ukraine already has
preferential trade relations with the members of the Eurasian economic union within the
framework of the Community of Independent States free trade area. These are perfectly compatible
with the Deep and Comprehensive Free Trade Area, and there is no reason why they should not
be maintained. So the EU-Ukraine bilateral DCFTA does not impose a false choice on Kyiv. Those
who say so are wrong or may have their own agenda,…”740
There have been those that have attempted to find some arrangement or solution to balance
the various competing factors that can be said to exist in those states bordering between the
European and Eurasian integration projects.741 In fact, it has been argued that the only way to truly
reconcile these differences and tensions is in the context of a broader agreement between the
European Union and the Eurasian Economic Union, which would establish a common free trade
area from “Lisbon to Vladivostok”.742 The obvious reason for this is that it is not possible to abolish
tariffs with the European Union under the terms of the AA/DCFTA while maintaining them against
the same organization, as is the case with the Eurasian Economic Union. 743 It has been suggested
that trilateral negotiations in this area would be the ultimate solution to the dilemma of having to
choose between regional integration projects. 744 Various models have been proposed as to what

739
ADAROV, Amat - ASTROV, Vasily - HAVLIK, Peter - HUNYA, Gábor - LANDESMANN, Michael -
PODKAMINER, Leon (2015): How to Stabilise the Economy of Ukraine, Background Study, The Vienna Institute
for International Economic Studies, 15 April 2015, https://wiiw.ac.at/how-to-stabilise-the-economy-of-ukraine-dlp-
3562.pdf (Accessed 2019.02.24)
740
GOTEV, Georgi (2015): EU Pushing Ukraine towards trilateral free trade, with Russia, Euractiv, April 15 2015,
http://www.euractiv.com/section/economy-jobs/news/eu-pushing-ukraine-towards-trilateral-free-trade-with-russia/,
(Accessed 2017.08.2)
741
Ibid.
742
ADAROV Amat et. al (2015): i.m. 46.
743
Ibid.
744
Ibid.

137
legal form an agreement solidifying such cooperation would take, with one commentator having
described it in terms of being a possible “mega deal”.745 Proposals have included a comprehensive
economic and trade agreement or a deep and comprehensive free trade agreement.746 If any such
development were to take place, it is more likely that the former would be the model adopted, as
a DCFTA usually requires conformity to the laws and regulations of the European Union, which
is a prospect that in certain areas would likely not be attractive to the member states of the
EAEU.747 This appears to be very unlikely at this present moment in time due to the complex state
of relations between Russia and the European Union. 748 Of course, it goes without saying that one
of the primary sources of these tensions relates to Ukraine, and the events that have taken place
there since 2014.
However, despite the tensions and conflicts in recent years, the idea of a common great
integrated space is still attractive to certain leaders. For example, in 2016 President Putin stated
that "Along with our Chinese colleagues, we are planning to start official talks on the formation
of comprehensive trade and economic partnership in Eurasia with the participation
of the European Union states and China.” He went on to add that “I expect that this will become
one of the first steps toward the formation of a major Eurasian partnership, […] the “greater
Eurasia”.749 Important voices from within the European Union have also continued to express
support for such a project. German Chancellor Angela Merkel has also said that "I hope that Russia
would increasingly develop ties with the European economic area, finally resulting in a common
economic area from Lisbon to Vladivostok."750 European Commission President Jean-Claude
Juncker had also said “I have always found the idea of an integrated trade area linking Lisbon to
Vladivostok to be an important and valuable objective.”751 Also, in October 2017 in Verona the

745
VINOKUROV, Evgeny (2014): A Mega Deal Amid A Relationship Crisis, Russia in Global Affairs, 18 December
2014, http://eng.globalaffairs.ru/number/A-Mega-Deal-Amid-a-Relationship-Crisis-17221 (Accessed 2018.08.21)
746
VINOKUROV, Evgeny et. al. (2016): Challenges and Opportunities of Economic Integration within a Wider
European and Eurasian Space, IIASA Synthesis Report 2016, October 2016, 15,
http://pure.iiasa.ac.at/id/eprint/13982/1/18-01-17%20Final%20Eurasian%20project%20report.pdf (Accessed
2018.08.21)
747
The one signed between the European Union and Canada has been suggested a model. See Ibid.
748
Ibid.
749
ELIA, Danilo (2016): The Greater Eurasia, Putin’s idea of Europe after Brexit, Eastwest, June 29 2016,
http://eastwest.eu/en/opinions/riding-the-russian-rollercoaster/the-greater-eurasia-putin-s-idea-of-europe-after-
brexit, (Accessed 2017.08.2)
750
Sputnik News (2016): From Lisbon to Vladivostok: Merkel Seeks Free Trade Zone Between Russia, EU, 5 June
2016, https://sputniknews.com/politics/201606051040810928-merkel-eu-russia-cooperation/, (Accessed 2017.08.2)
751
The Baltic Course (2015): Lithuanian MFA: Juncker’s words on EU-Russia ties his personal opinion, not EU’s,
20 November 2015, http://www.baltic-course.com/eng/baltic_states/?doc=113180, (Accessed 2017.08.2)

138
Eurasian Economic Forum was held, which brought together various politicians and business
leaders from Russia, Italy and around the world, 752 which sought to discuss, according to President
Putin, “prospects for cooperation between the leading integration associations, namely the
European Union and the Eurasian Economic Union.”753 And recently Kazakhstan’s deputy
foreign minister Roman Vassilenko has also made the statement that “The long-term goal of
regional interaction between the EAEU and the EU is to create a single economic space from the
Atlantic to the Pacific Ocean – a free trade area” and that “Greater cooperation between the
EAEU and the EU will allow for the entire region’s potential to be fully realised, including Central
Asia”.754
Ukraine has found it extremely difficult to pursue a multi-vector policy with regards to the
two neighbouring integration projects on its borders. Since gaining independence it had attempted
to do this with varying degrees of intensity at different stages of its existence. However, the
differing rules and requirements of the respective European and Eurasian projects have made it
difficult to achieve this in practice, and with the signing of the Association Agreement with the
European Union in 2014, the country has made an unambiguous and firm choice in the direction
of European integration. It can be said that in the long term, for countries who may wish to pursue
a multi-vector and multidimensional policy with the regards to the EU and EAEU, the only viable
solution may be the EU as a whole actually coming to a comprehensive understanding and
agreement with the EAEU. In the present environment this does not seem very likely due to the
tense and complex state of relations that exist at the present time. However, as seen above, there
are those from within both the EU and EAEU who maintain a desire for a broader and expanded
integrative space that would go beyond the borders of their own organizations.

752
Russian News Agency TASS (2017): Verona opens 10th Eurasian Economic Forum, October 19 2017,
http://tass.com/economy/971433, (Accessed 2017.08.2)
753
Belarusian Telegraph Agency (2018): Putin: Eurasian forum in Verona enjoys well-deserved international prestige,
Belarus News, 19 October 2018, http://eng.belta.by/politics/view/putin-eurasian-forum-in-verona-enjoys-well-
deserved-international-prestige-106033-2017/, (Accessed 2017.08.2)
754
GOTEV, Georgi (2019): Kazakhstan advocates closer ties between EU and Eurasian Economic Union, Euractiv,
17 January 2019, https://www.euractiv.com/section/central-asia/news/kazakhstan-advocates-closer-ties-between-eu-
and-eurasian-economic-union/ (Accessed 2019.03.22)

139
 CONCLUSIONS

This dissertation has attempted to explore and examine various aspects of the European Union’s
external relations with the Russian Federation and Ukraine, with a particular focus on its legal
aspects. By employing a comparative analysis, with a particular focus upon the Partnership and
Cooperation Agreements, and Association Agreement, as well as certain other relevant
instruments, it has been seen that there are significant differences in the nature of these relations,
one of the primary being that Russia does not seek a deeper integration with the European Union
in the same way that Ukraine does, with the latter since attaining independence (though with
varying degrees of intensity) having sought to draw as closely as possible to the European Union,
even desiring to one day achieve full membership. As has been seen, in recent times relations
between the European Union and Russia, and Ukraine and Russia, have deteriorated, having
experienced various difficulties and tensions due to such factors as the Euromaidan Revolution
and the subsequent events which followed, which include developments in Crimea and Eastern
Ukraine.
As to the future of the European Union’s external relations with Russia and Ukraine, time
will tell as to how their contours and characteristics will change and develop in the future. In
relation to Russia, despite various calls for the lifting of sanctions against Russia and the
questioning of their utility, and a desire among certain quarters within the European Union for a
resetting of relations and rapprochement, it appears that the restrictive measures regime placed on
Russia by the EU will continue into at least the near future, if not beyond. It is likely that there will
continue to be voices in the European Union that will persist in calling for the lifting of the
sanctions and restrictive measures. It is undeniable that these measures are a major issue in
relations between the EU and Russia and, as has been seen in this dissertation, it can be said that
it is difficult to predict their ultimate duration due to the various complex factors involved in the
relationship. In any case, the adoption by the European Union of restrictive measures as a result of
events in Crimea and East Ukraine against the Russian Federation is a notable and striking example
of the utilization of certain tools of external relations policy available to it in relation to its dealings
with third countries.
In relation to Ukraine, the country has unambiguously moved forward along the path of
European integration, particularly with the signing of the Association Agreement. It can be

140
expected that this process will continue and gain strength with time and the Ukrainians have also
clearly articulated their desire to achieve the status of a full European Union Member State.
However, the fact that the country has not been given an explicit membership perspective, coupled
together with the general enlargement fatigue which exists in the European Union (as evidenced
by the referendum in the Netherlands) does not bode well for such a prospect, at least in the near
future. In particular, it can be said that the impending Brexit, which was explicitly linked to issues
relating to large scale migration from fellow European Union citizens particularly from the region
of Central and Eastern Europe, will no doubt create a degree of caution in any future enlargements.
Already important voices from within the European Union have expressed concern again future
enlargement into the West Balkan region, despite the fact that these states, within the context of
the Stabilisation and Association Agreements, have been giving explicit membership perspectives
for the future in relation to eventual full membership of the European Union. 755 In that case, it is
undeniable that such an attitude will also have an effect on any possible membership aspirations
that Ukraine might have. What is certain, however, is that balancing the various factors outlined
in this work, and articulating a viable and realistic long-term strategy for dealing with both of these
vital neighbours on its borders will continue to be among the greatest and most crucial challenges
of European Union external relations policy.
Though we may speak of the European Union’s external relations with third countries such
as Russia and Ukraine, it must be remembered that the EU is still composed at this time of 28
sovereign states, often with different aims and perceived national interests, with their own specific
characteristics and background. This has often had a direct bearing on the articulation of European
Union external relations policy, and furthermore, these individual Member States still continue to
conduct independent policies in various areas which can also be influenced by domestic
considerations as well. Here, this has been well illustrated in the case of the Netherlands and the
referendum that took place there in 2016, which ultimately led to the European Union as a whole
having to respond to this development. It is obvious that when a country wishes to pull closer to
the European Union and integrate more deeply with it, both in terms of the kind of Association
Agreements signed by Ukraine, or within the broader context of enlargement policy itself with the

755
HOPKINS, Valerie (2019): France and Germany pour cold water on Balkans hopes for immediate EU accession,
Financial Times, 29 April 2019, https://www.ft.com/content/0c8e1402-6a9f-11e9-80c7-60ee53e6681d (Accessed
2019.05.30)

141
explicit aim and perspective of accession, that the concerns and even internal political situations
of European Union Member States will necessarily have to be addressed.
It is inevitable due to the present realities that the European Union’s relations with both the
Russian Federation and Ukraine will in some way have to take into account the issue of energy, in
particular the transportation and deliver of natural gas. As has been seen, there have been and are
various gas pipeline projects which have rarely been without contentious issues attached to them,
in particular relating to the European Union’s legal regulatory framework and the way in which
this would affect and influence these pipelines operation on the territory of the EU. Also, the fact
that Ukraine has and continues to play an important role as a gas transit territory is an important
factor to be taken into account with regards to this topic. As seen in this dissertation, any alternative
pipeline that is able to deliver natural gas from Russia to the Member States of the European Union
which would decrease Ukraine’s role as a gas transit country is of great concern to that country, as
seen in particular with the issue of the Nord Stream 2 pipeline project at the present time.
Additionally, it has been seen that Ukraine and Russia differ markedly in their attitude to the
reception of the European Union’s energy acquis, with the former committing itself to
approximating itself to its norms and standards, while the Russian Federation does not adhere to
such a model of relations.
With regards to Hungary’s position both as a European Union Member State and as a
country which is a neighbour to Ukraine and which also has certain important links to the Russian
Federation, in particular with regards to energy, it has been seen that, like all the other Member
States of the European Union, it has national interests which it pursues. This can be observed with
regards to energy relations with Russia and certain matters in relation to Ukraine. These are
examples of how individual Member States can continue to pursue independent foreign policies
with third countries, while these foreign policies still interrelate with, influence and are influenced
by the broader European integration process, structures, regulations and laws. In relation to
Hungary’s energy relations with the Russian Federation, the specific example looked at here was
nuclear energy and the Paks II project. This is an important example in that it shows that despite
the tensions that exist at the moment, manifested in such things as the restrictive measures that
have been imposed, certain European Union Member States such as Hungary have pursued
relations with Russia in certain sectors when they have deemed it in their interests to do so.
However, as was seen, certain issues were raised by the European Commission with regards to the

142
matter, which also illustrates the way in which the broader European Union regulatory regime can
also directly impact and at times even impede the extent and degree of relations that can be pursued
by EU Member States and third countries.
As to the Eurasian Economic Union, it is a regional integration project which in certain
ways mirrors the European Union, and, as seen in this work, claims a certain inspiration from the
European integration project. This can be seen in part by certain similarities when it comes to the
institutional structure and aspects of its economic integration. It is undeniable that a certain amount
of competition has taken place in parts of Europe to attract certain countries to both the European
Union and Eurasian Economic Union integration projects, in particular Ukraine. As has been seen,
in certain cases there has been some attempt or at least propositions with regards to how to balance
the two integration projects in various ways. Such balancing raises certain legal complexities,
which would inhibit certain propositions for a kind of simultaneous integration with both the
European and Eurasian integration projects. It is likely that the only viable and effective way for
a certain country attempting to balance both of these would be both of these regional organizations
coming to an agreement between them, creating, on some level, a large and expansive integrated
space. However, due to the present dynamics of relations, this does not appear as a realistic
development in at least the near future.

143
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