Ukraine country profile28 August 2006
by eub2 -- last modified 03 March 2014
The EU is seeking an increasingly close relationship with Ukraine, going beyond mere bilateral co-operation, to gradual economic integration and a deepening of political co-operation.
Member of Schengen area:No
Political system: Republic
Capital city: Kiev
Total area: 603 700 km²
Population: 45.7 million
Ukraine is a priority partner country within the European Neighbourhood Policy (ENP) and the Eastern Partneship (EaP). The Partnership and Co-operation Agreement (PCA) which entered into force in 1998 and provides a comprehensive and ambitious framework for cooperation between the EU and Ukraine, in all key areas of reform.
At the Paris Summit in September 2008 an agreement was reached to start negotiations on an EU-Ukraine Association Agreement, which is to be the successor agreement to the PCA. Several negotiating Rounds have since been organised, alternately in Brussels and Kiev (see: 4th Joint Progress Report on Negotiations on the Association Agreement. In November 2009, the Cooperation Council adopted the EU-Ukraine Association Agenda. This Agenda replaces the former Action Plan, and will prepare for and facilitate the entry into force of the new Agreement. For 2011/12, a list of 90 priorities for action was jointly agreed by Ukraine and the EU.
At the 15th Ukraine-EU Summit of 19 December 2011, the EU leaders and President Yanukovych noted that a common understanding on the text of the Association Agreement was reached.
The Association Agreement will significantly deepen Ukraine’s political association and economic integration with the EU. As Ukraine became a member of the World Trade Organisation (WTO) in May 2008, negotiations on the establishment of a Deep and Comprehensive Free Trade Area (DCFTA) could be launched, as an integral part of the Association Agreement.
After Russia, the Ukrainian republic was the most important economic component of the former Soviet Union, producing about four times the output of the next-ranking republic. Its fertile black soil generated more than one-fourth of Soviet agricultural output, and its farms provided substantial quantities of meat, milk, grain, and vegetables to other republics. Likewise, its diversified heavy industry supplied the unique equipment (for example, large diameter pipes) and raw materials to industrial and mining sites (vertical drilling apparatus) in other regions of the former USSR. Shortly after independence in August 1991, the Ukrainian Government liberalized most prices and erected a legal framework for privatization, but widespread resistance to reform within the government and the legislature soon stalled reform efforts and led to some backtracking. Output by 1999 had fallen to less than 40% of the 1991 level. Ukraine's dependence on Russia for energy supplies and the lack of significant structural reform have made the Ukrainian economy vulnerable to external shocks. Ukraine depends on imports to meet about three-fourths of its annual oil and natural gas requirements and 100% of its nuclear fuel needs. After a two-week dispute that saw gas supplies cut off to Europe, Ukraine agreed to 10-year gas supply and transit contracts with Russia in January 2009 that brought gas prices to "world" levels. The strict terms of the contracts have further hobbled Ukraine's cash-strapped state gas company, Naftohaz. Outside institutions - particularly the IMF - have encouraged Ukraine to quicken the pace and scope of reforms to foster economic growth. Ukrainian Government officials eliminated most tax and customs privileges in a March 2005 budget law, bringing more economic activity out of Ukraine's large shadow economy, but more improvements are needed, including fighting corruption, developing capital markets, and improving the legislative framework. Ukraine's economy was buoyant despite political turmoil between the prime minister and president until mid-2008. The economy contracted nearly 15% in 2009, among the worst economic performances in the world. In April 2010, Ukraine negotiated a price discount on Russian gas imports in exchange for extending Russia's lease on its naval base in Crimea.
Source: European Commission, CIA World Factbook