Reform, Resilience and European Integration

(File-1) Ukraine Dilemma, Reform, Resilience and European Integration

Economic facts

Ukraine’s potential EU membership brings a number of significant challenges and opportunities. If adopted, Ukraine would be the EU’s largest country by land mass and rival Poland in terms of population. However, the ongoing war has dealt a blow to Ukraine’s GDP, necessitating a review of the Copenhagen criteria, or measures for assessing a country’s progress in terms of governance reforms that comply with European norms. Ukraine, despite its declared aspirations for liberal democratic rule, still has to implement many reforms to align with the EU.

An important aspect is the EU’s agricultural budget, which provides large subsidies to farmers and agribusinesses. Ukraine’s accession would make it the largest producer of agricultural products along with some of the weakest economic farmers. This change could create economic and political tensions by diverting significant funds from long-standing EU members. Integrating and subsidizing such a large competitor may not be economically prudent and could fuel internal instability across the Union. However, according to a study conducted by Bruegel, Ukraine’s EU membership will cost existing EU countries 136 billion euros from 2021 to 2027, or 19 billion euros per year – 0.13% of EU GDP (Darvas et al., 2024). ). This cost will minimally impact the net beneficiary status of existing members.

Ukraine’s membership could positively impact the EU’s GDP through increased trade, migration and foreign direct investment, leading to increased employment, production and tax revenues.

Expanding the EU single market through the admission of new members such as Ukraine could facilitate trade and increase local production and employment in existing member states. Immigration from new member states could alleviate labor shortages and solve demographic challenges faced by existing members.

Ukraine’s energy sector offers significant potential with its capabilities in natural gas, renewable energy and nuclear power. It could be a major exporter of energy-intensive products to the EU, such as low-carbon electricity, hydrogen, natural gas and ‘green’ steel (Devlin & Mykhnenko, 2024).

The reconstruction and modernization of Ukraine’s old and war-torn energy infrastructure offers ample opportunities for investment aimed at increasing energy efficiency and maintaining or improving energy services. Demand for financial services will be significant to support energy supply and efficiency investments in Ukraine.

political obstacles

An important aspect of Ukraine’s accession process will involve EU decision-making. Most EU decisions are taken by qualified majority voting (QMV), where a Council decision requires the approval of 55% of member states, i.e. at least 65% of the EU population. Ukraine would have around 9% of the vote, similar to Poland’s share of seats. This will slightly reduce the shares of other member states, such as Germany, whose share will drop from 18.6% to around 16.9%. As a result, Poland and Ukraine together will have relative voting weight relative to that of Germany.

Conversely, some decisions require unanimity within the Council, such as the issue of enlargement (Zweers et al. 2024).

The Council determines whether a candidate country is progressing in the accession process, based on various criteria and often politics.

Historically, member states have repeatedly used their veto power to block a country’s entry into the EU for political reasons. For example, France twice vetoed UK membership in 1963 and 1967, and more recently Greece and then Bulgaria blocked Macedonia’s participation for reasons unrelated to compliance with technical criteria (Hajdari, 2020).

This creates a clear power asymmetry in the accession process, allowing member states to set the pace according to their own domestic political interests and not according to the reforms candidate countries are working on. Member states focusing on domestic issues distracts from the core reform efforts and transformative goals of the EU enlargement process.