After the European Union's eastward enlargement, the new eastern neighbours are now among others, Ukraine and Moldova. They have been torn between adopting a pro-Western course and staying loyal to the traditional alliance with Russia. This dilemma has shaped the path to domestic socio-political reforms in these countries. This Working Paper looks at the role of the EU in supporting the political transformation of Moldova and Ukraine after independence in 1991 and at the domestic context which is of crucial importance if democracy promotion efforts are to be successful. It argues that, so far, the EU has failed to tailor its offerings to fit into the prevailing Ukrainian and Moldovan context and that an agreement with more specific advantages but also more specific demands would probably stimulate more reforms. The unstable domestic developments in the two countries has also had an important role concerning the impact of the EU's neighbourhood policy.