Sunday, 23 October 2011

Ukraine inks trade deal – but not with EU

Ukraine’s move to sign on to a free trade agreement between eight former Soviet republics Tuesday is bringing it closer to Russia, analysts said. And the agreement appears to be a direct result of souring ties with the EU over Ukraine’s jailing of former PM Yulia Tymoshenko – with a Thursday visit to Brussels by President Viktor Yanukovych cancelled.

Ukraine’s backing of the pact – which abolishes import and export duties to increase trade between countries – takes it a step closer to joining the Customs Union with Russia, Belarus and Kazakhstan.

Kyiv remains steadfast in opposing joining the Union, but by backing the free trade pact it is sending a signal that the option may be possible in the future, analysts said.

Prime Minister Vladimir Putin, who has been calling for a Eurasian Union that will effectively recreate the Soviet bloc geopolitically, has repeatedly urged Ukraine to join the Customs Union.

“Sit down, calculate, weigh it up, get rid of various political phobias from the past, and look into the future,” RIA Novosti quoted Putin as saying Wednesday after a meeting of EurAsEC leaders.

He underlined, however, that he had no intention of forcing Ukraine into the union against its will. “We are ready to open direct dialogue on Ukraine’s accession,”.

If states continue to work as “energetically” as they have on the Customs Union, a Eurasian Union could become possible by 2015, Putin said.

President Dmitry Medvedev, who visited Ukraine earlier this week, also called on Ukraine to join the Customs Union. The free trade pact came as EU President Herman Van Rompuy postponed an October 20 meeting with Yanukovych to discuss a free trade agreement with the EU – in what appeared to be a response to Ukraine’s jailing of former PM Yulia Tymoshenko over abuse of office.

“The EU is stubbornly forcing Ukraine to free Tymoshenko,” Alexander Rahr, a Russia expert at the German Council on Foreign Relations told The Moscow News. The free trade pact with Russia, he said, was a “softer” option, but still “a step towards the Customs Union.”

“It is a political sign that Ukraine is moving closer to Russia,” he said, which was clearly part of the fallout from the Tymoshenko conviction.

Tymoshenko was given a sevenyear prison sentence last week over a gas contract she brokered with Putin in 2009. Russia, the United States and EU condemned the verdict as politically motivated, and there is increasing evidence the ruling will hamper Ukraine’s EU integration efforts. Kyiv still insists on a free trade agreement with Brussels, and refuses to join the Customs Union.

Its free-trade pact with Russia was met with criticism from officials and opposition members. Prime Minister Mykola Azarov criticzed the pact for excluding commodities like oil and gas, the Ukrainian Journal reports. Former President Viktor Yushchenko said the pact would threaten EU ties.

“Just like Kharkiv agreement had shut our integration in the area of security, yesterday’s agreement shuts down our integration with the EU in the area of trade,” the Ukrainian Journal quoted Yushchenko as saying.

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