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Ukrainian PM prioritizes industrial cooperation with Russia

January 10, 2014, 11:14 UTC+3 KIEV

He believes that 2014 should become “a crucial year” for the Ukrainian economy

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KIEV, January 10. /ITAR-TASS/. Ukrainian Prime Minister Nikolai Azarov said his government would focus on three key tasks this and subsequent years: industrial cooperation with Russia, accelerated development of the national economy, and the commencement of talks on association with the European Union.

He believes that 2014 should become “a crucial year” for the Ukrainian economy. “Either we embark on the path of deep modernization of the economy with no turning back or we get drowned in political disputes,” he said at the first meeting of the government in this year on Thursday, January 9.

He stressed the need to launch industrial cooperation programs with Russia from the beginning of February. These programs “will give us hundreds of thousands of new jobs in the next couple of years and guarantees for the budgets of all levels. We will get financial resources for the development of the domestic market,” he said.

The prime minister also believes it necessary for “the free trade area in the CIS (Commonwealth of Independent States) to keep working” as its importance for the Ukrainian economy “can hardly be overestimated.”

These programs cost “tens of billions of U.S. dollars and even more. This is the future of our key industries, especially now that our industry has a chance for development with new gas prices that have become possible due to the agreements reached by our president,” Azarov said.


Deal with Russia

On December 17, 2013, Yanukovich made a deal with Russia, garnering financial assistance to his country. Under the agreement, Russia will buy Ukrainian bonds worth $15 billion to be taken from the Russian National Welfare Fund (of this amount three billion U.S. dollars’ worth of bonds have already been placed) and give a 33% discount on natural gas for Ukraine. In 2014, Ukraine will pay $268.5 per 1,000 cubic meter compared to $400 paid before.

Ukraine’s leading experts have already positively assessed agreements with Russia. They say these agreements will help Ukraine improve the situation on the financial market, to increase its gold and currency reserves and to repay loans from the International Monetary Fund (IMF).

Azarov said these agreements had saved the country from bankruptcy and a social collapse. “We have gained the prospect for the future and firm confidence that we will keep up social and economic stability. I state again that nothing threatens this stability,” he said.


Three main tasks

The prime minister also noted that nothing threatens the financial system of the country. “The agreements help us to adopt a budget of social development. Before this event the adoption of this kind of budget had been ‘absolutely impossible’ and a collapse had threatened the country,” he said.

The second most important task is to invigorate economic development in Ukraine. “This is a strong demand of our president. This will allow us to have competitive industry and agriculture in 5-10 years. It is important to concentrate all available financial resources on successful projects, primarily those focusing on industrial modernization. And there can be no compromises or delays there,” Azarov said.

He demanded that the factors which hinder investments in industries be eliminated within a month.

“Third, we must start practical talks on the terms of signing the Association Agreement with the European Union and a free trade area with the EU,” he said. “I instructed Deputy Prime Minister Yuri Boiko to conduct a thorough analysis of the consequences of this free trade area for the national economy. We do not need suppositions. We should talk with our partners in the language of facts, figures and undeniable arguments because at stake is the very existence of Ukraine, which is developing its own modern economy, not the economy of other countries. No risk may be ignored,” Azarov said, adding that this work should be completed within the shortest time possible.

Ukraine has reiterated on several occasions that it is determined to continue its European integration policy.


EU-Ukraine talks

The EU and Ukraine have agreed to draft a roadmap for signing the Association and Free Trade Area Agreement.

The talks will cover three key areas: creating favorable conditions for Ukraine to obtain maximum anti-crisis aid from the International Monetary Fund; creating a bilateral mechanism for consultations to solve problems associated with the signing of the Association Agreement; and determining the real cost of association.

European Commissioner for Enlargement and European Neighborhood Policy Stefan Fule urged Ukraine to work only with the IMF in order to overcome the current financial crisis as only the IMF could provide transparent and optimal forms of anti-crisis aid.

He said the EU intended to consider bringing possible aid from the IMF to its maximum but declined to name concrete figures.

However it is the strict terms of IMF aid, which required Ukraine to freeze salaries and raise domestic energy process that became the “last straw” that forced Kiev to decide against signing the Association Agreement with the EU at the Eastern Partnership summit in Vilnius in late November 2013.

On December 11, 2013, Azarov said Kiev would like to receive 20 billion euro worth of compensation from the EU for signing the Association Agreement.

“The European Union remains ready to sign the Association Agreement, including DCFTA, as soon as Ukraine is ready and proves its commitment by deeds,” Fule said.

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