MINSK, August 26. /ITAR-TASS/. The crisis in Ukraine cannot be solved by military force, Russian President Vladimir Putin said at a meeting between the leaders of the Customs Union of Russia, Belarus and Kazakhstan on the one hand and the president of Ukraine on the other on Tuesday.

“We are ready to exchange opinions on the current urgent crisis situation in Ukraine, which, we are convinced, cannot be solved through further escalation of the military scenario, without account for the vital interests of the country’s southeastern regions, without peace dialogue with their representatives,” Putin said at the meeting that also involved representatives of the European Commission.

"Ukraine’s transition to EU standards to cost billions of euros"

The Ukrainian economy’s transition to EU standards will cost it €165 billion over ten years while Russia may lose up to 100 billion rubles ($2.7 billion) from its economy’s forced readjustment, President Vladimir Putin said.

“The refusal to use technical norms common in the CIS countries and adaptation to EU standards will cost Ukraine €165 billion within 10 years,” Putin said at a meeting of the leaders of the Customs Union member states and the Ukrainian president.

The economies of Russia, Belarus and Kazakhstan that form the Customs Union will also be affected, Putin noted.

“In the most modest estimates, damage to the Russian economy alone may total 100 billion rubles. Entire sectors of our industry and agribusiness will be affected with all ensuing consequences for economic growth rates and employment,” Putin said.

“Losses will also be sustained by Belarus and Kazakhstan,” Putin said.

The Civil Initiative Committee led by former Russian finance minister Alexei Kudrin earlier gave an estimate of possible losses for Russia and Ukraine, if their trade relations deteriorated.

The estimate suggests that Russia may fall short of $4.5-5 billion worth of export revenues annually while losses in the financial, credit and property spheres are estimated at $45-50 billion, if Ukraine refuses to repay debts to Russia, imposes restrictions on Russian entities’ deposits and seizes Russia’s property.

The Civil Initiative Committee estimates Ukraine’s losses at about $100 billion in 2015-2018, including up to $8 billion a year from smaller money receipts generated by labor migrants in Russia, up to $4.2 billion a year from Russia’s possible refusal to give up pipeline gas transit across Ukraine, up to $3.7 billion a year from the risk of the persistence of high Russian natural gas prices, $2 billion from the risk of falling short of Russian investment, $1.6 billion from the risk of a reduced number of Russian citizens’ trips to Ukraine and $400 million from a possible refusal by Russian companies to provide transportation services jointly with Ukrainian operators.

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.

“In full compliance with the provisions of the CIS Free Trade Agreement and WTO norms we will have to cancel preferences for imports from Ukraine,” Putin said.

“I’d like to say that we are not going to discriminate against anybody, we won’t do this,” the Russian president added.

“We will just have to introduce the standard trade regime for Ukraine; the same that is applied also between Russia and the EU,” he said.

 

"Boosting Customs Union’s cooperation with Ukraine good but hardly possible"

Putin said that more intensive cooperation between the Customs Union of Russia, Belarus and Kazakhstan on the one hand and Ukraine on the other would be useful but added that it was hardly possible due the Kiev’s association deal with the European Union.

“In our view, it would be expedient to not only preserve but considerably boost interaction,” Putin said at a meeting of the leaders of the Customs Union and Ukraine.

“But the question arises whether it is possible to achieve these goals if the Association Agreement between Ukraine and the EU really starts working,” the Russian president emphasized.

Putin said Moscow does not doubt Ukraine’s right to self-determination.

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.