This paper argues that in the absence of a strong membership incentive within the European Neighbourhood Policy (ENP), a top‐down institutional convergence of CIS (Commonwealth of Independent States) countries towards European standards is unlikely to be successful. However, due to enlargement fatigue within the EU, the membership incentive is off the agenda for the CIS. The ENP must therefore either initiate or hasten a bottom‐up institutional convergence by identifying bottom‐up domestic forces that are willing and able to drive the convergence in a particular country. Ukraine, whose oligarchic clans are the main bottom‐up forces behind institution‐building, is a case in point. Having supported the first wave of institutional reforms during the Orange Revolution, these bottom‐up forces are now facing great difficulties in forming sustainable coalitions for further institutional reforms. The paper shows that the EU, by providing economic incentives rather than the membership incentive, could exploit the strong business interests of the oligarchic clans in the EU markets and EU investment to motivate them to jointly drive institutional convergence from the bottom up.