Russia imposes Ukraine trade measures

Russia has cancelled free trade privileges for Ukraine from 1 January, but says it still wants to meet EU mediators this weekend.

Russian president Vladimir Putin i signed the decree on Wednesday (16 December), shortly before Ukrainian leader Petro Poroshenko i met top EU officials in Brussels.

Putin said the measure is needed due to “extraordinary circumstances affecting the interests and economic security” of Russia, referring to an EU-Ukraine free trade treaty, which enters into force on the first day of the new year.

Russia had pushed for the EU to further delay the trade pact, which lay at the heart of last year’s Ukraine revolution, saying it will lead to cheap EU goods being re-exported from Ukraine to Russia.

It proposed the creation of a customs tracking system. But the EU and Ukraine said there’s no evidence EU exports will pose a threat and that customs information is commercially privileged.

Russia’s trade minister Alexey Ulyukaev, also on Wednesday, told the BBC that Russian negotiators are still willing to meet EU and Ukrainian counterparts on 21 December. But he warned that from 1 January there will be “a different economic reality.”

Poroshenko said in Brussels: “Ukraine is aware of these restrictions and the expected damage the Ukrainian economy. But we are ready to pay this price for our freedom and our European choice.” Previous estimates of the “damage” say it could cost Ukraine $1.5 billion a year in lost income.

Poroshenko also urged the EU: to extend the life of economic sanctions on Russia; grant Ukraine visa-free travel in 2016; and to reconsider building Nord Stream II, a Russia-Germany gas pipeline bypassing Ukraine, which could cost it another $2 billion a year in lost transit fees.

He said he has fresh evidence of Russian troops and arms in Ukraine. He also warned Nord Stream II could “undermine European solidarity.”

European Commission chief Jean-Claude Juncker i noted his people have met with Russia “more than 20 times, both at technical and political level” on trade.

He said the 21 December talks are “the last chance,” adding: “any threats or retaliatory measures contradict the mandate, objective and spirit of these talks.”

EU Council chief Donald Tusk i said EU-Ukraine free trade will lead to the “gradual economic integration of Ukraine in the EU internal market.”

He added that “our economic sanctions against Russia will remain linked to the complete fulfilment of the Minsk agreements,” referring to a ceasfire pact which obliges Russia to extract troops from Ukraine and hand back control of the border.

He earlier called for EU ambassadors to extend the punitive measures at a meeting in Brussels on Friday, instead of holding talks on the subject at the summit on Thursday.

But the summit is to see talks on Nord Stream II, with eight easterly EU states and Italy voicing Poroshenko-type complaints about the project.

Juncker, as well as Germany, have also offered to hold talks with Russia on EU cooperation with the Eurasian Economic Union (EEU), a Russian-led trade bloc, by way of repairing relations.

It prompted a rebuke by Lithuania and Poland, saying it’s premature to speak of better trade ties.

For his part, Russian foreign minister Sergei Lavrov said in a TV documentary, broadcast also on Wednesay: “they [the West] accuse us that it [the EEU] is Russia’s attempt to recreate either the empire or the Soviet Union … but these are all useless statements.”

He blamed the EU and US for holding “secret and behind-the-scenes” trade talks on a trans-Atlantic trade agreement which could also harm Russia’s interests.