Moscow Daily: Ukraine To Join Customs Union With Russia

MOSCOW, Russia -- Ukrainian President-elect Viktor Yanukovich is prepared to start talks on his country's entry into a customs union with Russia, Belarus and Kazakhstan, a Russian business daily reported on 17 February.

Viktor Yanukovych

The team of Viktor Yanukovich, who won the recent presidential election in Ukraine, is preparing to open negotiations on establishing a customs union with Russia, Kazakhstan and Belarus, the Moscow daily 'Kommersant' writes.

"Even though Ukraine is a full-fledged WTO member, multinationals do not see it as a separate market but target it for investment and trade along with Russia, Belarus and Kazakhstan," a high-placed Ukrainian official and member of Yanukovich's team is quoted as saying.

However, Ukraine's possible bid to join the union is likely to complicate Russia's position in talks on energy issues within the group, the paper said.

Ukraine's potential participation in the customs union was criticised on Tuesday (16 February) by Ukrainian Prime Minister Yulia Tymoshenko, Yanukovich's rival in the 7 February presidential run-off, Kommersant writes.

Tymoshenko said Yanukovich had already agreed with Moscow to join a customs union with Russia alongside Belarus and Kazakhstan. But she conceded that the move would offer Ukraine a 20-30% discount on the price of natural gas supplied to the ex-Soviet republic.

Representatives of Yanukovich's Party of Regions reacted with caution to the new president's plans to join the customs union and said Ukraine would not aspire to full-fledged membership of the scheme, Kommersant further reported.

"Our task is to deepen economic cooperation around the entire border. The customs union is an important integration project for us [...] but there can be no talk about Ukraine's full-fledged participation in the customs union, especially considering that we are a WTO member," said Anatoly Kinykh, deputy head of the Party of Regions' parliamentary faction.

Ukrainian sources told EurActiv that choosing between being part of either Russia's customs union or a free trade area with the EU was of "geostrategic" importance.

Although Kiev's economic relations with Brussels are becoming more important than its ties with Moscow, Ukraine may well tilt further towards Russia as the EU had offered "very little", they indicated.

The present legal basis of EU-Ukraine relations is a Partnership and Cooperation Agreement (PCA) established in 1998. In September 2008, under the French EU Presidency, the Union decided that the future legal basis would be an Association Agreement.

But the bloc made no commitment that Ukraine would join the European Union one day. It did so with Turkey in 1989.

The Association Agreement, meanwhile, will take time to be negotiated. Well-placed Ukrainian sources complained bitterly that the proposed document was "void of substance".

"The EU is letting us down, and here comes Moscow," the source said.

Source: EurActiv