Ukraine's New Leadership Eyes Customs Union With Russia - Paper

MOSCOW, Russia -- Viktor Yanukovych, Ukraine's president-elect, is prepared to initiate talks on the country's entry into the Customs Union with Russia, Belarus and Kazakhstan, a Russian business daily reported on Wednesday.

Russia, Belarus and Kazakhstan flags.

Ukraine's possible participation in the Customs Union was criticized on Tuesday by Ukrainian Prime Minister Yulia Tymoshenko, Yanukovych's rival in the February 7 presidential runoff, at a meeting with members of parliament from the Our Ukraine party of outgoing President Viktor Yushchenko, Kommersant said.

Tymoshenko said the Party of Regions leader had already agreed with Russia on signing documents on Ukraine's accession to the Customs Union with Russia, Belarus and Kazakhstan, the paper said.

Tymoshenko said the agreement with Russia would offer Ukraine a 20-30% discount in the price of natural gas supplied to the ex-Soviet republic, the paper reported, citing Anatoly Hrytsenko, chairman of the Ukrainian parliament's national security and defense committee.

However, Ukraine's possible bid for its entry into the Customs Union is likely to complicate Russia's position at talks on energy issues inside the union, the paper said.

The Foreign Ministry of Belarus announced on Tuesday that it would prioritize the issue of Russian export duties at spring talks on the Customs Union, the paper said.

Russia and Belarus were embroiled in a bitter dispute at the start of the year over duty-free oil supplies to Belarus that threatened crude deliveries to Europe.

Russia earlier offered to supply the ex-Soviet republic with some 6.3 million metric tons of oil for domestic consumption duty-free and demanded Minsk pay full import duties on crude it refines and sells on to Europe, dropping considerable subsidies.

Belarus, however, argued that Russia should supply up to 30 million metric tons of oil duty free, saying Russia's demand ran contrary to the deal on the Customs Union signed between the two countries and Kazakhstan in late 2009.

The dispute was resolved in late January after the parties signed an array of agreements on crude oil deliveries and uninterrupted transits to Europe.

Two high-placed sources in the Ukrainian government told Kommersant that the team of Yanukovych, who is to be inaugurated as president on February 25, was already making preparations for the first large-scale initiative to integrate Ukraine into the uniform customs space of Russia, Belarus and Kazakhstan.

"Even though Ukraine is a full-fledged WTO member, transnational corporations do not view it as a separate market but perceive it as a target for investment and trade along with Russia, Belarus and Kazakhstan," a high-placed official in the Ukrainian economics ministry and member of the Yanukovych team told Kommersant.

However, representatives of the Party of Regions, which propelled Yanukovych into the presidency, were more cautious about the new president's plans of integration into the Customs Union, saying Ukraine would not aspire for full-fledged membership in the union, the paper 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.

Source: RIA Novosti