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Russian and Ukrainian foreign ministers to hold talks in Kaluga

October 15, 2013, 8:01 UTC+3

The 10th meeting of the Committee on Economic Cooperation of the Russian-Ukrainian Interstate Commission will be held in the birthplace of Nikolai Azarov

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Photo ITAR-TASS/Dmitry Astakhov

Photo ITAR-TASS/Dmitry Astakhov

MOSCOW, October 15 (Itar-Tass) — Russian and Ukrainian Prime Ministers, Dmitry Medvedev and Nikolai Azarov, on Tuesday will hold in Kaluga the 10th meeting of the Committee on Economic Cooperation of the Russian-Ukrainian Interstate Commission.

An official of the Russian government staff said that the Russian delegation includes Minister of Education Dmitry Livanov, Transport Minister Maxim Sokolov, Minister of Labor and Social Security Maxim Topilin, as well as Agriculture Minister Nikolai Fyodorov. Other members of the delegation are head of the Federal Agency for the Development of the State Border Facilities (Rosgranitsa) Dmitry Bezdelov, head of the Federal Consumer Rights Protection and Human Health Control Service (Rospotrebnadzor) Gennady Onishchenko, head of the Russian Federal Space Agency Oleg Ostapenko and head of the Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) Sergei Dankvert. In addition, the delegation includes some deputy ministers and heads of Vnesheconombank Vladimir Dmitryev, head of the Russian Chamber of Commerce and Industry Sergei Katyrin, VTB head Andrei Kostin and head of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin.

It is noteworthy that Kaluga is the birthplace of Ukrainian Prime Minister Nikolai Azarov. The event will be held within the framework of the official visit of the Ukrainian government’s head to Russia.

One on one conversation

The Russian government’s press service previously reported that before the meeting, the heads of government would hold “one on one conversation”. “Dmitry Medvedev and Nikolai Azarov will speak about the talks’ outcome at a news conference,” the press service said.

“During the negotiations of Medvedev and Azarov with the heads of a number of Russian and Ukrainian ministries and agencies it is planned to discuss the state of and prospects for the development of bilateral cooperation in such spheres as mutual trade, transportation, aerospace industry, nuclear energy and agriculture. The sides are also expected to discuss a number of issues related to Russia-Ukraine interaction in the natural gas sector,” the Russian government official said. He added that special attention would be paid to the conceptual issues of bilateral cooperation and its prospects in the context of the integration processes, in which both states are involved.

EU Association Agreement issue

“Russia is not going to dissuade Ukraine from concluding the Association Agreement and establishing a free trade zone with the EU — it is its sovereign right. Furthermore, the Ukrainian government nearly a month ago had already approved the document’s draft. We urge it only to carefully weigh all “pros and contras” of such a step, take another look at the texts of the agreements for their compliance with its earlier commitments to the other organizations in which we jointly participate and bear commons responsibility for their work, and also not to create objective, technical barriers to the possible continuation of our cooperation,” the Russian government emphasizes. “Russia does not force anybody to join the Customs Union, which already now has a powerful core. We will strengthen and develop this association, form the Eurasian Economic Union, at the same time continuing constructive engagement with the EU,” said Russia’s Cabinet official.

The process of Ukraine’s integration into the European Union in recent years has become a major political and economic issue on the bilateral relations’ agenda. Moscow has repeatedly said that Ukraine, when it becomes an associate member of the EU, would lose preferences that it has in trade with Russia. It also would not be able to become a full-fledged member of the Customs Union. Although at the end of September, Russian Prime Minister Dmitry Medvedev did not rule out that Ukraine would be able to stay in the Customs Union as an observer. “We have repeatedly stressed, dear colleagues, you should decided which is more useful, more interesting for you, more important for the Ukrainian people,” said Medvedev. “As far as I understand, the Ukrainian partners have made their choice. The Ukrainian government made a decision on the signing of the agreement on associate membership, a forum was held, the president of Ukraine said that they were ready to engage in the integration with the Customs Union only to the extent that does not run counter to their Association Agreement. This is just an absolutely phrase from the legal viewpoint that they understand that they will be able to join the Customs Union only to the extent that is not contrary to the agreements with the Europeans,” the Russian Prime Minister said.

These changes will also affect the traditionally controversial “gas issue.” Thus, Russia’s presidential adviser Sergei Glazyev said that Russia would not implement the plans of three-fold gas price reduction for Ukraine if Kiev signs an association agreement with the EU. “If the agreement is signed, the plans for a sharp, three-fold gas price reduction will not be implemented,” he said. “We have planned to reduce gas prices three times. To the level gas is sold to Belarus — $160 per one thousand cubic meters.”

Bilateral trade goes down

There has been a downward trend in the Russian-Ukrainian trade volume recently. For example, in 2012 it reached $45.1 billion, down 10.8%, compared to 2011, Russian exports amounted to $27.2 billion, down 10.9%, imports — $17.9 billion (a 10.7% decrease). This year, the decline has continued. Over the first six months of 2013, trade turnover between Russia and Ukraine amounted to $17.7 billion, down 19.8%, compared to the same period in 2012, Russian exports totaled $8.4 billion, down 21.9%, imports — $6.3 billion (a 16.8% decrease).

In January-June 2013, the share of Ukraine in Russia’s foreign trade turnover decreased year-on-year to 4.4% (in 2012 — 5.4%). In the first six months of 2013, Ukraine dropped from 4th to 5th place (share — 4.4%) among the countries — major trade partners of Russia (after China, the Netherlands, Germany, Italy). Russia’s share in the total turnover of Ukraine was 26.2% (29.9% in the previous year).

The representative of the Russian government staff believes that “despite the decline in bilateral trade, the potential of bilateral economic cooperation is still solid.” The implementation of major high-technology projects may contribute to its effective use. He referred, in particular, to the construction in Ukraine’s Kirovograd region of a plant for the production of nuclear fuel with the use of Russian technology. “The promotion of cooperation, in particular, in the sphere of aviation, would also promote revitalization of Russian-Ukrainian economic relations. Thus, the projects on the Antonov AN-124 and AN-148 planes have good prospects, including in terms of the creation of joint ventures,” added the Russia’s Cabinet official.

He stressed that the removal of barriers to the movement of goods and services, capital and labor would contribute to the general development of investment, trade and industrial ties between the two countries. Therefore, one of the issues to be discussed will be the implementation of the agreements reached within the framework of the Commission on investment cooperation and the protection of investors’ rights that is headed by the Russian and Ukrainian prime ministers.

Issues to discuss: grain, gas etc.

Another major cooperation sphere between the two countries is the grain sector. The idea of creating a “grain pool” of Russia, Ukraine and Kazakhstan remains interesting. “This mechanism is real and potentially would make it possible to proceed to the full coordination of marketing policy on the world grain market,” said the Russian government official.

The sides will also consider the situation in the gas sector, which has been in the focus in recent years. The Russian side is expected to confirm its interest in finding a long-term, comprehensive and mutually beneficial solution to problems in this sphere.

It is also planned to discuss the implementation of a number of humanitarian projects aimed at deepening cooperation between the two countries in the cultural, educational, scientific and other spheres — in particular, conduct joint activities to mark the 200th anniversary of Taras Shevchenko in 2014. The parties will also touch upon Russian-Ukrainian inter-regional cooperation. The venue for this discussion will be a business forum with the participation of the heads of regional state administrations and representatives of the Ukrainian business community that will be held in Kaluga.

High hopes

Azarov on the eve of his visit to Russia told the Rossiya 24 news TV channel that Ukraine pinned hopes on the meeting with the Russian Government and looked forward to the implementation of agreements that had been reached three years ago. “Of course, I put high hopes on this regular meeting with the Russian Prime Minister. We hope that the agreements the negotiations on which we had started more than three years ago, at the first meeting of our intergovernmental commission in Sochi with Vladimir Putin, who then was the government head, will be finally fully implemented,” Azarov said. In particular, he named projects of cooperation in the aviation and aerospace sectors. “Of course, we will talk about the implementation of major projects in the sphere of power engineering, including nuclear engineering, projects that we had planned in the construction of plants for the processing and production of nuclear semi-finished products and so on,” said the prime minister.

He also said that on October 15 the Ukrainian side hoped to reach an agreement with Russia on creating a roadmap for the development of industrial cooperation. “We hope that we will manage to reach an agreement with the Russian authorities on the establishment of the so-called roadmap for the development of industrial cooperation. We see that the advantage of this document is in its concreteness,” said the Ukrainian prime minister. According to him, this document would specify all those responsible for the implementation of the agreements, a specific timeframe would be set, and it would be possible to sum up the cooperation results on it.

Industrial parks

On Monday, the Ukrainian delegation led by Azarov already begun to study the experience of Russia’s Kaluga Oblast in the creation of technology parks. The delegation visited two industrial parks: Vorsino in the Borovsk district where they familiarized themselves with the work of the Freight Village Kaluga multimodal logistics centre, and Rosva (a Kaluga suburb) where a Peugeot Citroen plant is located. “Our task is to watch and learn how to create an industrial park, we’re going to join this tremendous work,” said Azarov. According to him, “Ukraine has much potential for the creation of technology parks and attraction of foreign investment to them.”

In Ukraine, the Law “On Industrial Parks” is in effect. A company, which has the status of an industrial park, may qualify for state assistance, loan benefits, and potential residents of an industrial park can count on customs and tax privileges. Kharkov has also been Ukraine’s largest industrial centre. “The Gorky Park of Culture has been created in Kharkov with funds provided by Vnesheconombank,” head of the Kharkov regional state administration Mikhail Dobkin said. “However, despite the law, which had been adopted more than a year ago, there are still a number of difficulties, so Ukrainians want to use the experience of the Kaluga region.”

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