Ukraine: What to watch for in 2016

12-02-2016

With the entry into force of the EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA) as part of the Association Agreement (AA) on 1 January 2016, Ukraine has taken a significant step forward on its long road to European integration. However, 2016 will entail a new series of tests for the country. While Kyiv is under continued pressure to fulfil the February 2015 Minsk II ceasefire agreement, the interruption of electricity supply to Crimea — occupied by Russia since March 2014 — has added fuel to bilateral tensions over the peninsula, which could intensify in 2016. Ukraine's default on its US$3 billion debt to Russia, and Moscow's response will further strain bilateral ties. The growing fragility of the pro-European government coalition could increase the likelihood of early parliamentary elections and impede the on-going reform process. At the same time, the national security situation – precarious overall as it is – could be further undermined by cyber-attacks. In addition, a number of external developments, for example, the split within the EU vis-à-vis the Russia-backed 'Nord Stream 2' gas pipeline and the forthcoming Dutch referendum on the EU-Ukraine Association Agreement, planned for April 2016, will require attention.

With the entry into force of the EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA) as part of the Association Agreement (AA) on 1 January 2016, Ukraine has taken a significant step forward on its long road to European integration. However, 2016 will entail a new series of tests for the country. While Kyiv is under continued pressure to fulfil the February 2015 Minsk II ceasefire agreement, the interruption of electricity supply to Crimea — occupied by Russia since March 2014 — has added fuel to bilateral tensions over the peninsula, which could intensify in 2016. Ukraine's default on its US$3 billion debt to Russia, and Moscow's response will further strain bilateral ties. The growing fragility of the pro-European government coalition could increase the likelihood of early parliamentary elections and impede the on-going reform process. At the same time, the national security situation – precarious overall as it is – could be further undermined by cyber-attacks. In addition, a number of external developments, for example, the split within the EU vis-à-vis the Russia-backed 'Nord Stream 2' gas pipeline and the forthcoming Dutch referendum on the EU-Ukraine Association Agreement, planned for April 2016, will require attention.