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If Ukraine opts for EU, Customs Union will slam its door shut

September 10, 2013, 17:01 UTC+3 Alexandrova Lyudmila

MOSCOW, September 10 (Itar-Tass) - Faced with a stark choice - if it should be with the European Union or with Russia - Ukraine has long managed to sit on the fence. Now the moment of truth appears to be round the corner. Moscow looks very resolutely minded: if Kiev chooses the EU, Ukraine will have to say good-bye to its chances of joining the Customs Union.

At the Vilnius summit of the Eastern Partnership this November, Ukraine plans to put its signature to an agreement of association with the European Union, of which the free trade zone agreement is part.

In that case, though, the door to the Customs Union of Russia, Belarus and Kazakhstan will be slammed in its face.

“After concluding a corresponding treaty on associated membership with the European Union states, the entrance to the Customs Union will be closed to our Ukrainian partners. The European Union leaders have been saying the same all along pretty clearly, too,” said Russian Prime Minister Dmitry Medvedev.

At the same conference, First Deputy Prime Minister Igor Shuvalov said that Russia had invited experts on international law to compare the contents of the agreement with the EU which Ukraine would like to sign, and the clauses of the Customs Union treaty.

“The legal basis of the European Union and that of the Customs Union are not the same. If Ukraine’s agreement with the European Union takes effect, a number of liabilities, crucial to the Customs Union, will not be applicable in Ukraine. For instance, the unified customs tariff rule,” he said.

Earlier, the Russian presidential adviser for integration within the Customs Union and the unified economic space of Russia, Belarus and Kazakhstan, Sergei Glaziev, told the daily Kommersant that “the moment Kiev inks the agreement with the European Union, it will ditch the very possibility of ever joining the Customs Union, the Unified Economic Space and the Eurasian Economic Union.”

“As soon as it signs the agreement, Ukraine will lose independence and will stop being a full-fledged partner for us, let alone a strategic one,” Glaziev said.

Of late, Moscow in every way tried to push Kiev towards the Customs Union. It even applied some harsh economic sanctions. The customs blockade that Russia staged in August was the latest row in Ukrainian-Russian relations. Russia said that its customs service was just making preparations for the day Ukraine would sign the agreement of association with the European Union. But even before that, a variety of trade wars had flared up between the two countries at Moscow’s initiative.

Earlier, Russian President Vladimir Putin told the media that if the Ukrainian authorities preferred to create a free trade zone with the European Union, and not be integrated with the common economic space of the Customs Union, Russia would respect such a decision. But in a situation like that, it would have to take care in protecting its own market.

“We shall be forced to protect ourselves,” Putin said, adding that Ukraine’s decision to open its market to European goods and make simultaneous transition to EU technical standards would actually phase out domestic manufactures from the Ukrainian market.

Experts have calculated that Russia’s losses resulting from Ukraine’s absence from the Customs Union would be far greater than Ukraine’s own.

Ukraine exports to Russia mostly food industry products and farm produce. Russia accounts for about 30 percent of all Ukraine’s exports (a quarter of Ukraine’s GDP) and 80 percent of Ukraine’s export of food and vegetables - some 15 billion US dollars in all, says Anna Kokoreva, an analyst at the financial group Alpari. Rossiiskaya Gazeta quotes her as saying the collapse of the import of farm produce to Russia would strip Ukrainian producers of 60 million dollars.

Since the beginning of this year, the export of Ukrainian products has been down by 20 percent. Any further decline in exports would be disastrous for the country’s economy, she warns.

Russia’s own losses would be considerably smaller because the share of products marketed in Ukraine accounts for eight percent of Russia’s exports.

In the meantime, the Ukrainians’ attitude to Russia against the background of trade wars and discussions over integration has worsened, as is seen in the results of an opinion poll by Research&Branding Group.

The Nezavisimaya Gazeta daily quotes the poll as saying Russia’s policies towards Ukraine in the trading and economic sphere look groundless to 56 percent of people in the central regions, to 53 percent in Western Ukraine and to 42 percent in southern regions. The number of those unhappy with the policies of their eastern neighbour has grown in the traditionally pro-Russian east: 32 percent in the industrial and coal-mining region of Donbass said they were utterly unjustified.

Ukrainians’ perception of Russia has changed, too. Over four months, the number of those who described Russia as a fraternal country reduced by 10 percent to 22 percent. Moscow, though, hopes that worsening of its relations with the two other largest Slav countries is temporary.

“Whatever might happen, wherever Ukraine may be going, we shall meet some place, someday again,” Russian President Vladimir Putin told Channel 1 in a recent interview. “This is so because we are one people. The nationalists on both sides may get pretty angry with what I’ve just said, but this is really so.”