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Ukraine faces choice – to be a Customs Union member or to launch free trade zone with EU

March 05, 2013, 11:57 UTC+3

Putin reminded Yanukovich that Ukraine’s integration to the Customs Union looked more attractive than the proposal of the European Union

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On Monday Russian President Vladimir Putin met with his Ukrainian counterpart Viktor Yanukovich to discuss cooperation in the gas sector. Putin reminded Yanukovich that Ukraine’s integration to the Customs Union looked more attractive than the proposal of the European Union, where Ukraine had been invited for a long time.

While focusing on Ukraine’s possible accession to the Customs Union Yanukovich regretted that bilateral trade between Russia and Ukraine shrank by almost $5 billion, the Komsomolskaya Pravda daily reported. “In our cooperation with the Customs Union negative processes are underway and this concerns the two sides. We are absolutely not happy to register economic losses as a result. There are different forecasts regarding our accession, there are positive forecasts, but there are also opponents of this step. Now this problem is political rather than economic one,” he added.

Rossiyskaya Gazeta wrote that now Ukraine faces a choice, whether to be a member of the Customs Union or to have a free trade zone with the European Union. This very aspect gave the two presidents’ meeting a special intrigue. European officials from Brussels had already made several attempts to disrupt such meeting, the daily reported. However, Kiev evidently listened to Russia’s call to stop dividing European states into friends and outsiders.

Brussels openly called on Kiev to make a choice between Russia and the European Union. Earlier the EU had not allowed itself to demonstrate its true goals so sincerely. It is evidently that Brussels has realized that now Russia’s proposals for Ukraine are much more attractive than any empty promises of the European Union.

The daily believes that in reality the EU in the wake of the deepest crisis in the eurozone can palm off Kiev exclusively with talks about “bright future.” In fact, Ukrainians in case of hasty accession to the EU will face the same future as Bulgarians and Romanians. They are not simply called openly second-rate people in the EU, but such conditions are being created for them under which neither Bulgaria nor Romania will ever go from the bottom by the level of the per capita income inside the EU.

Instead of this Russia offers Ukraine the Customs Union and a free economic space.

Putin explained his Ukrainian counterpart why it was advantageous for Ukraine to join the Customs Union, the Vedomosti business daily wrote. In theory, taking this step Ukraine can knock down the price of gas supplies for which it pays almost as much as Germany. It even can get its ruinous take-or-pay contract of 2009, for which ex-prime minister Yulia Timoshenko is serving her prison term, reconsidered.

But to realize the absurdity of the Monday talks you should not be a profound expert in the gas market, Vedomosti supposed. It is enough to understand what ‘take or pay’ is. Under contracts of this kind a customer should pay for a certain gas volume for a certain period (for instance, 12 months) irrespective of whether he consumed gas or not. The daily expressed confidence that such a scheme was timely, when there was the lack of gas and oil suppliers. But now times changed.

Who does need now a supplier demanding an advance payment for years to come at prices that are significantly higher the market ones? Who will be lured by cooperation with a supplier that suddenly begins to wave a $7.5 billion lawsuit trying to recover money for underconsumption of gas in 2009? Any company that behaves in such a way loses customers at a cosmic speed.

Yanukovich will seriously discuss accession to the Customs Union or handover of control over Ukraine’s gas pipeline system to Gazprom only if some other obligations not related to the gas contract exist, the daily reported. Ukraine learns to live in a real economic situation and steadily reduces its dependence on Russian resources.





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