Dutch people have rejected a landmark free trade deal between the European Union and Ukraine in a referendum held this week.
Widely seen as a measure of anti-EU sentiment in the country, the referendum saw a low turnout of 32.2%, only marginally above the legal threshold of 30%, which makes the vote valid. 61.1% voted against the deal, with 38.1% in favour.
While the vote is not binding, Dutch Prime Minister Mark Rutte, who also holds the EU presidency until July, said the deal ratification could no longer happen “just like that”. A revision of the EU deal on the Dutch side would cause a delay in its implementation, but analysts believe the deal may still come into place.
“The EU leadership has been very clear about their continued commitment to Ukraine’s European integration. At the same time, the Ukrainian authorities have reiterated their determination to push on with the association agreement and the trade deal, regarding the Dutch vote as a minor hindrance,” Lilit Gevorgyan, senior economist at IHS Global Insight, tells GTR.
While the damage created by the vote may be more political than economic, the vote nonetheless comes at a challenging time for Ukraine. The Panama Papers leak has linked President Petro Poroshenko with an offshore firm in the British Virgin Islands, and the country’s perception as a reliable trade partner is shadowed by issues of corruption and instability.
“There are already increased concerns amongst the business community over the disunity amongst the Ukraine’s leading parties over the makeup of the government, lack of a serious anti-corruption drive and frozen IMF credit due to political uncertainty,” says Gevorgyan. “The Dutch vote may delay the implementation of the free trade pact, affecting Ukraine’s external trade diversification away from Russia. This will only protract Ukraine’s current economic troubles, and any hopes for export-led recovery will probably shelved off for now.”