Ukraine and the all-or-nothing EU

The trouble with EU membership is that it is such a big deal. A country that wants to be part of the club, and enjoy its free trade benefits also has to accept a mountain of regulation and to sign up for the common currency. It is all or nothing.

That puts countries like Ukraine in a fix, just as it put the UK in a bit of a fix in the early 1970s. The UK did not want to raise tariff barriers and lose its trading relationships with its historic trading partners such as Canada, Australia and New Zealand, from which it imported a great many agricultural products – butter, lamb, fruit, bacon and much else. But thanks to the Common Agricultural Policy, it did not have much choice. Today, the UK is inside the EU's tariff wall, which makes trade with the rest of the world more expensive, and naturally focuses UK trade on Europe.

Ukraine would undoubtedly gain from closer trading links with the EU, but the all-or-nothing nature of the deal would mean that the country's links to Russia and other non-EU countries would suffer, just as the UK's Commonwealth links did. And that, of course, is seen as a threat by Ukraine's large Russian-speaking population. And – never mind the political and defence implications, given the EU's close links with NATO – Russia does not want to see its trade with Ukraine cut back, any more than New Zealand did ours. So they see the future direction of Ukraine as a high-stakes game.

As a logical matter, that does not have to be. If the EU allowed Ukraine the same sort of status enjoyed by (neutral) Switzerland, the country would be free to trade with the EU as part of its customs-union club – but would remain free to preserve trading links to other countries as well. It would also be free to retain its currency and its legal and regulatory structure. A free trade pact with the EU that would help grow the Ukrainian economy, without threatening Russia or the Russian-speaking Ukrainians that the country would be wholly swallowed up into a Western political alliance.

Sadly, though it might talk about creating 'closer trading links' with Ukraine, the EU will never offer the country such a free-trade-but-no-politics status. If they did, every EU applicant would be demanding it right away – along with quite the UK and a few other EU Member States who hate all the regulation, currency union and horse-trading.

Which means that as a practical matter, the stakes will remain dangerously high in Ukraine, whatever happens. What a pity we cannot just have free trade without the politics.