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EU association agreement may cause major problems in Ukraine

November 16, 2013, 17:51 UTC+3 MOSCOW

Experts debate on the document which may be signed during the Eastern Summit due on November 28-29 in Vilnius

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Minister of integration and macroeconomics of the Eurasian Economic Commission Tatyana Valovaya

Minister of integration and macroeconomics of the Eurasian Economic Commission Tatyana Valovaya

© ITAR-TASS/Valeriy Sharifulin

MOSCOW, November 16, /ITAR-TASS/. The association agreement with the European Union may cause major problems in Ukraine in various directions, Russian and Ukrainian experts said commenting on the situation during the going week. The document may be signed during the Eastern Summit due on November 28-29 in Vilnius, should certain issues be settled /including the one related to Yulia Timoshenko/.

Minister of integration and macroeconomics of the Eurasian Economic Commission, Tatyana Valovaya says “Ukrainian producers will not be able to follow immediately the new standards, and the national market will see European producers replacing the local ones.” He stressed Ukraine’s refusal to integrate with the Customs Union “will affect mostly the technology sectors.”

Sergei Glazyev /Russian presidential advisor/ forecasts ukraine’s losses from the refusal from the Eurasian integration would make by 2030 about 250-300 billion dollars. Besides, the adaptation of the Ukrainian economy to the EU technical and phyto-sanitary norms would require the country’s investments between 120 and 200 billion euro.

Clearly, many experts in Ukraine realise the association with the EU will not be beneficial for that country. At a meeting with President Viktor Yanukovich the national union of industrialists and entrepreneurs and the trade union’s federation asked for postponing the agreement. “Let us postpone the signing for a year as yet. Let us get ready, let us buy necessary equipment. This is what industrialists are asking for,” MP Valentin Landik said. He explained that Ukrainian products would not be able to compete after signing the agreement, as export to the Customs Union countries would be limited. President of Novokramatorsk machinery plant Georgy Skudar stated: “Nobody is waiting for us in the EU.”

A member of the parliament’s faction of the ruling Party of Regions Vladimir Oliynik is sure “Ukraine’s major problem nowadays is to find compensations for Ukraine’s losses from opening markets to goods from the EU and from possible measures Russia may undertake.” He stressed a free trade zone would lower dramatically revenues of the national budget due to lifted customs duties on European goods. “Those losses could not be compensated by a planned growth of Ukraine’s export to the EU countries,” the deputy said pointing to “consequences from further misbalanced trade and economic relations with Russia.”

Ukraine’s authorities also agree problems will be growing. President Vladimir Yanukovich says “for the country a major problem is modernisation of enterprises to have them comply with the EU technical standard, which requires huge investments,” which, analysts say, may be 100-500 billion dollars. Ukraine’s Prime Minister Nikolai Azarov said depending on the scale of required modernisation, the investments could make “between 100 and 160 billion euro for ten years.” However, not a single politician mentioned sources of the huge money in question, especially minding the present economic situation in Ukraine.

The fears about the association with the EU refer not only to the economic situation in Ukraine. Dmitry Rogozin (Russia’s Deputy Prime Minister) warned Moscow would not be able to cooperate with Kiev in the defence sphere. “In that case, Russia will not be able to consider Ukraine as an absolutely neutral country, since the standards will be different. This means we shall not be able to deploy there certain sensitive technologies, and we shall have to localise them fully in the territory of the Russian Federation. It would cause big problems related to future development of the aviation and space industries and of many others.” He added the approach would be used in placing orders with the countries “which will not follow the traditional recent economic rules.”

“We shall have to localise that production in our own national territory, and all the consequences, for example, for Ukraine, are clear,” Rogozin said.

Sergei Glazyev says official Kiev’s choice is “of clearly political character and contradicts with all economic criteria.” “The political message of the campaign - isolation from Russia - and this is confirmed from Washington and Brussels.” A possible confirmation the view is correct is the national riot, which is scheduled in Kiev for November 24, and which will support the country’s trend for the European integration. The event will feature leaders of three opposing parties - Arseniy Yatsenyuk of Batkivshchyna, Vitaly Klichko of UDAR and Oleg Tyagnibok of Svoboda. A failure to sign the association agreement “is the treason, the inevitable reverse movement of our country back to the past, in the direction of the wild neo-Soviet empire called The Customs Union,” the three parties said in the statement published on Batkivshchyna’s site.

However, Kiev may receive from the EU a chance for a more balanced solution, based on economic, not politicised, interests. Several days earlier, the European Parliament surveillance mission on justice in Ukraine Aleksander Kwasniewski said commenting on the situation around Yulia Timoshenko “if things develop this way further on, Ukraine will be able to come into the agreement only in two years.” Germany’s Foreign Minister Guido Westerwelle continued comments on the topic by stressing time for settlement of the situation around the former prime minister was fading away.

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