Russia is apt at employing the stick-and-carrot tactic with regard to its not quite equal “strategic” partners. On March 15 Russia’s Prime Minister Vladimir Putin demonstrated this in Minsk at a press conference concluding the Interstate Council of the Eurasian Economic Community (EurAsEC) and the sitting of the Council of Ministers of the Union State. The head of the Russian state said that Ukraine would benefit from joining the Customs Union of Russia, Kazakhstan and Belarus. The author happened to hear from Russian diplomats that if Ukraine joins this “threesome,” it will get gas for Russia’s internal prices. Meanwhile, the senior secretary of the commission of the Customs Union Sergei Glazyev also recently stated that if Ukraine joins the Customs Union, the commodity turnover between Ukraine and Russia will increase by 50 billion dollars. These are really appealing proposals.
Yet Russia understands that this is not enough to attract Ukraine, which is now holding negotiations on establishing a deep and comprehensive free trade area with the EU. And here is where the Russian premier uses the stick. He stated in Minsk that the creation of the free trade area with the EU can have a negative impact on Ukraine’s economic relations with Russia, Belarus and Kazakhstan.
“The level of customs protection Ukraine adopted while joining the WTO is over two times lower than our single customs tariff. And even if Russia joins the WTO on the conditions we determined for ourselves with the partners in the WTO negotiations, it will not be changed — it will be two times higher than Ukrainian. This means that if Ukraine creates the free trade area with the EU and has to waive many of its positions that are sensitive for the Ukrainian economy, certainly, it will expect that these goods will go to the Russian market. And we can’t afford doing it,” the Russian premier pointed out. As a result, he added, we will have to erect a border.
How else can one understand him saying that “holding negotiations with the European Union in the format of the Single Economic Area, and the Customs Union, are quite different things, and positions are different there — much more beneficial.”
Indeed, Russia will benefit from Ukraine joining the Customs Union, a high profile Ukrainian diplomat told The Day off the record. And, perhaps, Ukraine will get temporary benefits as well, but no one has estimated them, and nobody mentions the potential losses, the interlocutor pointed out. He also added that at present no preparation of documents for the Customs Union is under way. At the same time, the diplomat doesn’t exclude that Ukraine’s position on the Customs Union can change if by the end of the year the agreement on the free trade area with the EU is not signed.
It’s now apparent that Moscow is not quite frank in its relations with Kyiv and doesn’t want Ukraine’s integration with the EU. This is evident given the statements by Russian politicians about the alleged groundlessness of Ukraine’s fears of losing its sovereignty if it joins the Customs Union and the EurAsEC. At this, the Russian party knows very well that the Ukrainian government firmly began moving toward the EU, which, of course, clashes with membership in such organizations as the Customs Union or the EurAsEC. However, there is no certainty as to when Ukraine would join the EU. But this issue depends on Ukraine’s readiness and compliance with European standards and norms, as well as on the EU’s support and encouragement.
COMMENTARY
Valerii CHALY, deputy director general of the Razumkov Center, former deputy minister of foreign affairs:
“This year, of course, is very important with regards to a final decision on the direction of Ukraine’s economic integration. There is a rather realistic possibility in the second half of this year to sign an association agreement with the EU, as well as the deep and comprehensive FTA with the EU, thus realizing the first real stage of Ukraine’s economic integration with the EU. At the same time, there are voices, mainly those of politicians, that suggest a change in direction; this must be some kind of response to repeated appeals of the Russian government, notably the recent appeals of the Russian prime minister on the desirability of Ukraine joining the Customs Union (Russia, Belarus and Kazakhstan). Of course, politicians and experts know very well that Ukraine won’t be able to be in these two projects at the same time. That is why such appeals today somewhat disorient the EU. Though not everybody likes it, we now face a decision.
“Shall Ukraine change the direction of integration? Unfortunately, this serious discussion was not held, I mean in the parliament first of all. I hope that at the parliamentary hearing, which will be held on the initiative of the people’s deputies Mykola Martynenko and Arsenii Yatseniuk on May 11 this year, integration issues will be considered, including the FTA with the EU and the question of interaction with the Customs Union, the political position will finally be determined and insinuations regarding Ukraine’s vacillations will be removed.
“Another matter is that today consultations on an FTA within the Commonwealth of Independent States are held. Such an area existed but it didn’t work properly, perhaps new proposals will somewhat improve the situation. Therefore, in essence, the free trade area, either with Russia within the framework of bilateral relations, or within the CIS, is a possible format on the north east. But it’s absolutely definite that this can’t be the Customs Union for it doesn’t guarantee obvious results for the future. At the same time, cooperation with Russia, first of all in economic sphere, is a priority for Ukraine. There is a strategic partnership between the countries. But it doesn’t mean that Ukraine should automatically enter integration projects. Ukraine must chose its direction. It is fixed legislatively, nothing changed when the new government came. Therefore all conversations about the possibility of Ukraine joining the Customs Union should be abandoned.
“The position of the Russian Federation, which invites Ukraine to the Customs Union, is clear to me. For the format they rely on to work properly, they need to expand the market’s scope. Today the European market is more powerful, capacious and attractive. Meanwhile, the current format between Russia, Belarus and Kazakhstan doesn’t solve existing problems. And answers to these questions are in each specific country. In particular, there is the issue of increasing competitiveness and efficiency. Of course, these are projects designed for some period. But in the case of Ukraine they can simply suspend the situation for a long time. We have different positions on this issue. What is attractive for Russia is not always attractive for us.”
