Tuesday, August 20, 2013

Russia Moves To Restrict Imports If Ukraine Signs EU Deal

MOSCOW, Russia -- Russia is moving to clamp down on imports from Ukraine if its ex-Soviet neighbor signs a landmark free-trade and political-association deal with the European Union, a senior adviser to President Vladimir Putin said.


Sergei Glazyev

The comments Sunday by Sergei Glazyev, a senior economic advisor to Mr. Putin, signal a more forceful approach by the Kremlin to the potential deal, which could anchor Ukraine, for centuries ruled from Moscow, more firmly in the West.

Moscow is urging Ukraine, a Texas-sized country sandwiched between Russia and the EU, to join a rival trade bloc that it is forming with other former Soviet republics.

Russia last week began tougher checks at the border that Ukrainian exporters said stalled shipments and caused serious financial losses.

Mr. Glazyev said Sunday that those checks were "preventative measures" in preparation for changes in customs procedures if Ukraine signs the EU pact.

"We are preparing to toughen customs administration in case Ukraine takes this suicidal step and signs the association agreement with the EU," Mr. Glazyev was quoted as saying by state news agency RIA Novosti.

Moscow has long dangled the carrot of cheaper gas prices—which Kiev says it needs to kick-start its spluttering economy—in return for Ukraine joining the customs union with Russia, Belarus and Kazakhstan.

Ukrainian President Viktor Yanukovych has indicated so far, however, that he prefers the EU deal.

Ukraine's exports to Russia totaled 12.3 billion euros ($16.4 billion) last year, according to EU data, second only to the 12.9 billion euros of goods sent to the EU. 

Russia and Ukraine's prime ministers spoke about the tighter border checks by telephone Sunday, government officials from both countries said.

"The government heads expressed joint conviction that there can be no talk of a trade war between Russia and Ukraine," the office of Ukrainian Prime Minister Mykola Azarov said in a statement.

The statement from Russia's Dmitry Medvedev was terser, noting "the need to solve recent problems in trade relations on a mutually beneficial, constructive basis."

Senior officials from both sides will meet in the coming days, according to both statements.

Since Ukraine declared independence from the Soviet Union in 1991, Russia has fought to maintain its centuries-old sway.

The Orange Revolution street protests in Kiev in 2004 swept a pro-Western president to power ahead of Mr. Yanukovych, who was then backed by Russia.

Mr. Yanukovych staged a remarkable comeback to win the presidency in a 2010 election.

But after signing a deal to extend the basing of Russia's Black Sea Fleet in Ukraine, he balked at tighter economic and political links pushed by Mr. Putin.

Instead, he wants to seal the EU agreement at a November summit in Vilnius, Lithuania, but the EU has not confirmed whether it will sign it.

The 28-nation bloc has criticized the 2010 conviction and jailing of Mr. Yanukovych's main political rival, former Prime Minister Yulia Tymoshenko, for alleged abuse of office and pressed him to release her.

It also has criticized Kiev for putting up a hurdle to EU car imports through a new tariff.

Mr. Glazyev, the aide to Mr. Putin, said that an EU-Ukraine free-trade deal would lead to EU goods flooding Ukraine's market and that tough checks would be needed to prevent them flowing into Russia.

A post on Swedish Foreign Minister Carl Bildt's Twitter blog Thursday said it would be "very serious" if Russia was starting a "silent trade war against Ukraine to block its relations with the EU."

Source: The Wall Street Journal

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