Troops loyal to Kiev and local militias in the southeastern Ukrainian Donetsk and Luhansk regions are involved in fierce clashes as the Ukrainian armed forces are conducting a military operation to regain control over the breakaway territories, which on May 11 proclaimed their independence at local referendums and now call themselves the Donetsk and Luhansk People’s republics.
During the military operation, conducted since mid-April, Kiev has used armored vehicles, heavy artillery and attack aviation. Hundreds of civilians have been killed in it. Many buildings have been destroyed and hundreds of thousands of people have had to flee Ukraine’s embattled southeast.
"Ukraine’s transition to EU standards to cost billions of euros"
Ukraine and the EU signed the political block of the association agreement on March 21, 2014, and the economic block — on June 27. After the Ukrainian parliament ratifies the document, the free trade zone with zeroing the import duties will take effect between the European Union and Ukraine. Two weeks after the ratification, the agreement will take “temporary” effect. This formula was invented by the European Commission for accelerating the document’s coming into force without waiting for the so-called democratic procedure of its ratification by all 28 EU member states, which will take more than a year. Russia’s authorities have repeatedly said that if Ukraine enters the free trade zone with the EU, Russia would have to protect its internal market from the duty-free inflow of European goods through Ukraine.
Russia and Ukraine have signed about 400 various agreements — bilateral and within the CIS framework. The EU insists on Ukraine’s withdrawal from a number of important economic agreements, which threatens Ukraine’s agro-industrial enterprises and allied industries that employ seven to eight million workers - half of the total able-bodied population. The whole machine-building industry of Ukraine and its energy and military-industrial sectors face a similar problem.
Russia says that if it preserves the free trade regime with Ukraine after the opening of Ukraine’s market for the EU, the Russian market will be faced with unlimited re-exports of EU products through Ukraine, which will be damaging for Russian producers. Russia is based on the Annex 6 to the CIS Free Trade Agreement that allows setting inside the free trade zone customs duties above zero for the countries that concluded similar agreements with other states.
Russia has to cancel preferences for Ukrainian imports
Russia will have to cancel preferences for Ukrainian imports as a measure to protect its market and introduce the standard trade regime in the conditions of Ukraine’s agreement on association with the EU, Vladimir Putin stated.
Ukraine is closely integrated into the economic space of the Commonwealth of Independent States (CIS, a loose association of former Soviet republics), Putin said, adding that it, in essence, along with Russia, Belarus and Kazakhstan, is an integral part of the world’s largest economic complex.
The four countries’ companies have close connections in all basic spheres and have arranged unique production chains, the Russian leader said.
The Customs Union member states are Ukraine’s key foreign trade partners with trade reaching $50 billion in 2013 and $22.7 billion in the first six months of 2014. The Customs Union’s market accounts for 30% of Ukraine’s exports. The volume of Russian capital in Ukraine’s banking system has reached some 32%.
Putin also recalled that the four countries have formed a solid legal framework of cooperation. In particular, in 2011, CIS member states signed a free trade area agreement, and now deals are being drafted on free trade in services, on state procurement and pipeline transit.
Russia hopes for meaningful dialogue with Ukraine and EU over economic interaction
Russia is hoping for a meaningful dialogue with Ukraine and EU over economic interaction while taking into account mutual interests, Russian President Vladimir Putin said at a meeting on Tuesday between the leaders of the Customs Union countries with the Ukrainian President Petro Poroshenko and representatives of the European Commission.
“We hope that we'll be able to have a meaningful dialogue at today's meeting, at which our arguments will be received both by Ukrainian and European partners,” he said.
“We stand for closer interaction between the European Union and the Eurasian Economic Community, and beginning the search for ways of interfacing both integration processes,” Putin said. He expressed hope that all the participants in the meeting supported the strategic objective to create one economic space from Lisbon to Vladivostok.
“I underline that we're ready to discuss any options based on taking into account mutual interests,” the Russian president said.