Of railways and long-distance relationships

By Vanora Bennett and the EBRD's audiovisual team.

When a train tunnel was first built through the Beskyd pass in 1886, the Carpathian mountains where the line ran were in the heart of Europe. The railway tied together all the Austro-Hungarian empire’s domains in the centre and east of the continent into one coherent economic and cultural whole – the opera-and-whipped-cream fiefdom of the capital, Vienna.

Several imperial collapses, world wars and redrawings of the continent’s maps later, the 131-year-old Beskyd railway tunnel is in bad repair and the region around it lies right outside political Europe, in post-Soviet Ukraine.  The decrepit tunnel leaks, gets iced up in winter, and is only wide enough for a single train. Goods and passenger trains wait their turn to pass through.

Now, a new tunnel at Beskyd will help Ukraine at least double traffic west into Europe, and unblock the worst bottleneck in a new east-west transport corridor spanning the continent.

“What this project offers for the future is that we are moving towards Europe,” said Vladimir Kharlan, chief construction engineer for Ukrainian Railways’ western branch. The upgrade symbolises modern Ukraine’s bigger hope that it can integrate itself better into the European Union's (EU) economy and in time also become part of the 21st-century European political family by joining the EU.

Ukraine needs the reorientation. Until 2014 its biggest trade partner was Russia, to its east. Then conflict with Moscow slashed Ukraine’s exports to Russia, from 24.3 per cent in 2012 to 11.9 per cent in 2015, and cut its GDP by about 20 per cent. Ukraine is now seeing a modest recovery after two years of deep recession. Latest economic forecasts predict the Ukraininan economy to grow 3 per cent in 2018 and 2019.

Since 2015, the EU has been Ukraine’s biggest trading partner, taking more than a third of its exports. Trade with the world’s biggest market has started growing healthily. In the first 10 months of 2017 Ukraine’s exports to the EU in US$ terms increased by 32.3 per cent year-on-year, and its total trade turnover with the EU increased by 24.8 per cent in the same period.

“Trade has now been displaced to the Middle East, the Far East and Europe to some extent,” commented Sevki Acuner, Head of Ukraine at the EBRD, Ukraine’s largest single investor. “It’s hard to adjust but reality forces you to do so more quickly and dramatically.”

The new tunnel will be working by May 2018. But is it enough? What else does Ukraine need to do to connect its economy, political culture and people more effectively with Europe?

“This tunnel, which has existed for a very long time, was made with the original idea of being part of Europe,” said Acuner. “This work has helped to restore it to its strong original basis. But of course this is only a part of the picture. There are other forms of transportation, other forms of cultural and economic exchange.”

At its simplest, connectivity is about transport links – the “hardware” of sharing ways of getting goods and people from A to B. The Beskyd upgrade is part of a vast plan to improve Europe’s infrastructure connections. 

In 1991, when the Soviet Union collapsed and Ukraine and its other former republics became independent, that renewal was badly needed. Economic connections for Warsaw Pact and Soviet republics had been to or through Moscow. Travel westward across the European political divide had never been prioritised and railways in the Russian empire had actually been built using a broader gauge than the European norm (1520 mm, not the European 1435 mm) to discourage invasion from the west.

Cometh the moment, cometh the plan. In the mid-1990s, the EU, the Organisation for Economic Cooperation and Development (OECD) and the former Soviet republics in eastern Europe set out to create a transport network for the future. It would reach far beyond the then-15-state European Union, along 10 Pan-European Transport Corridors – multi-state rail and road routes joining central and eastern European countries with one another, with the EU and, at the outer edges, with Russia and Turkey. 

Ukraine is on three corridors. The Beskyd tunnel is on Corridor V, from Venice through Italy, Slovenia and Hungary to Ukraine, passing through western Ukraine’s capital, Lviv, to Kiev. The EBRD and European Investment Bank (EIB) have also co-financed road upgrades to the M-06 Highway, Ukraine’s part of Corridor III to Brussels. As EBRD President Sir Suma Chakrabarti has said: “Our highway maintenance programme brought such welcome changes to some Ukrainian roads it recently earned star billing on TV under the title ‘200 kilometres of happiness’.”

Completing these massive projects was never going to be easy. Infrastructure work of this complexity had rarely been realised in the countries attempting them in the 1990s and they had little experience of international procedures. Teething troubles caused delays. At Beskyd, says EBRD Head of Transport Sue Barrett, an EBRD financing deal with Ukrainian Railways (known by its Ukrainian initials as UZ) – for work including the $40 million the Beskyd tunnel project was originally supposed to cost – was signed back in 2004. But delays in much-needed reform as well as issues with tendering, rising costs and tunnelling forced multiple rethinks. Mark Magaletsky, EBRD Head of Infrastructure in Ukraine, explains that a contract with the Ukrainian firm Interbudmontazh, which brought in an Austrian sub-contractor, Porr, was signed in 2011. It was one of the largest contracts signed by a Ukrainian firm with the EBRD. But it was 2014 before the EIB brought an extra US$55 million needed to complete the tunnel. The European Union also provided a grant to support the construction and, together with Austria, provided technical assistance.

Still, the end result is all positive. The new tunnel, says Barrett, will make operating this route more efficient, by allowing both two-way traffic and high-speed trains – important since the line “carries something like 60 per cent of Ukrainian traffic towards the western border”, which is more than 300 million tonnes of largely bulk traffic. Magaletsky – who with Sue Barrett has worked on the project since talks began in 2001 – talks too of the sense of achievement: “Despite all the issues and problems we faced, we’ve stayed on track and managed to get through all these troubles – technical, political, contractual, legal, you name it – to successful completion. It’s a good feeling, both for infrastructure and for the country.”

Other physical connections are also being improved. One is air travel. The EBRD’s Sevki Acuner said: “Today there are more flights into Ukraine from more carriers, with Turkish Airlines flying to six or seven destinations as opposed to one or two before. There are three or four times more flights.” And in March 2018, one of Europe’s largest low-cost airlines, Ryanair, one of Europe's largest low-cost airlines, announced it would start flying to Kiev from 10 European routes, and to Lviv from five, from October.

As Ukraine gets better physical connectivity, the next, “software”, question is what to do with it.

In the early years of independence, Ukraine found few new answers to this question, staying close to its larger neighbour Russia. In the 1990s, it was too far away to be on the EU’s radar. Brussels was more interested in the central and eastern European countries earmarked for quick accession in 2004 and 2007. 

This changed after those countries joined the bloc and the expanded EU’s border shifted eastward. From 2004, the new eastern border had Poland, the Slovak Republic, Hungary and (after 2007) Romania on the inside. Ukraine was next door. 

Also in 2004 came Ukraine’s Orange Revolution when, after an eventful campaign, a presidential candidate perceived as pro-European beat one viewed as pro-Moscow. With quicker reform now promised, the EU offered Kiev “all but institutions” –the chance to access the EU’s internal market after significant reform – within the European Neighbourhood Policy and Eastern Partnership initiative. But the impetus went out of the Orange Revolution and Ukraine continued to waver over whether to face east or west.

Finally, in 2013-14, this question brought Ukrainians to blows. Then-president Viktor Yanukovych rejected a pending EU Association Agreement in favour of more ties with Russia. Young protesters who wanted Ukraine to be European occupied Kiev’s (Independence) Square, or Maidan, nicknaming it the Euromaidan. Clashes left about 130 people dead – the “Heavenly Hundred” - and brought a new government. Yanukovych fled to Moscow. More violence followed. Russia claimed the Ukrainian-ruled Crimean peninsula and pro-Russian separatist statelets emerged in Russian-speaking eastern Ukraine.

The EU offered Ukraine economic help. The long-awaited EU Association Agreement and Deep and Comprehensive Free Trade Agreement (DCFTA) was signed. Ukraine, which had been one of the biggest consumers of Russian gas as well as the largest transit route for Russian gas to Europe, reorganised procurement so its gas came, for the first time, from west to east. It stopped buying gas from Russia and went instead to the European market, using, among other sources of finance, a rotating €300 million loan from the EBRD.

This support was timely. Today’s Ukraine is solidly pro-Europe. This might surprise Samuel P Huntington, whose ground-breaking 1993 article, “Clash of Civilisations”, drew a fault-line between western civilisation and Orthodox civilization right through Ukraine, suggesting the cultural differences between the once-Austrian, once-Polish west and the wheat-growing centre and further east might be a source of conflict. Today, EBRD political analyst Oleksandr Pavlyuk says the events of 2014 made Ukraine more united than before in nurturing European-minded aspirations. “After Euromaidan, Huntington’s fault line moved further east, right to the peripheries beyond central government control. The rest of Ukraine today is clearly pro-European. If Huntington were living and writing now, he’d probably draw his dividing line with all Ukraine right inside the European space.”

With sporadic fighting still going on in the east, President Petro Poroshenko has strong voter support for his aim for Ukraine to apply for EU membership by 2020. His European Integration minister Ivanna Klympush-Tsintsadze said in July 2017, “everyone will only benefit from Ukraine joining the EU."

Still, in 2017, Ukrainians were finally given symbolic hope for a more European future: the right to travel visa-free (“bezviz”) into the EU. 

“At last!” tweeted President Poroshenko. On 11 June, the day “bezviz” began, he was filmed walking through a stage-set “gateway into Europe” decorated with photos of the Arc de Triomphe and Colosseum, to be hugged by Slovak President Andrej Kiska on the European side.

Ukrainians are already beginning to use the new connections.

Freedom to travel is still limited by expense and practicalities. Not everyone has the required biometric passport and increased demand since “bezviz” has meant longer waits to get one. Many at the western border still use old methods, old passports and visas. But there are stories of increased congestion.

At Shegyhi, near the Polish border at Przemysl, lines of cars, buses and lorries inch forward to a wire-festooned frontier. Has there been more traffic since 11 June? “Oh yes,” says Sveta, a stallholder selling sweets and cognac. Oksana, a 23-year-old student heading by bus through Poland to Latvia, adds, “it’s really a lot easier now, even if the queues are longer.” 

Visa-free Ukrainians can only spend three months in Europe once every six months and – to allay fears they will crowd the EU labour market – have no rights to work. 

Still, work abroad is on some minds at Beskyd. Train driver Bogdan Khalapirchuk said young people taking the three-year training to do his job “often talk about going abroad to work. The Slovak Republic and the Czech Republic take on a lot of people who can work there if they know the language. They earn more than us too, with better conditions. But I’m not going. I’m used to here. I have a family.”