Russia has tightened customs control with Ukraine and imposed checks on the quality of its goods in what appears to be a warning to Kyiv over the planned signature of a free trade deal and broader association agreement with the European Union.
However, the EU made their signature conditional on progress made in areas such as democratic and judicial reforms, including the release from prison of former prime minister Yulia Tymoshenko.
The draft agreement offers closer political and economic cooperation, but stops short of offering a path towards EU accession.
Ukraine hopes to sign the agreement at the 28-29 November Eastern Partnership Summit, to be held in Vilnius under the Lithuanian EU presidency.
Several EU leaders, especially from the former Soviet bloc countries, are pushing for a signature of the association agreement in Vilnius, out of geopolitical considerations.
Lithuania, which took over the rotating presidency on 1 July, puts high hopes on the summit's success.
An advisor to the Russian President Vladimir Putin has admitted that Moscow wants to send a signal to Kyiv about the consequences of signing the proposed EU-Ukraine Association Agreement and Deep and Comprehensive Free Trade Agreement (DCFTA) (see background).
"No need for dramatising. The thing is that the Russian Customs Service conducted preventive measures related to preparations for changes in customs administration in case Ukraine signs the Association Agreement with the EU," Russian presidential advisor Sergei Glazyev is quoted as saying.
Russia is pushing Ukraine to become part of its Customs Union, already joined by Belarus and Kazakhstan. Brussels has made it clear that membership of the Customs Union and association status with the EU are incompatible.
Media have reported that Russian border guards have imposed time-consuming checks on imports from Ukraine, and Moscow’s consumer rights watchdog Rospotrebnadzor banned imports of Ukrainian confectionery giant Roshen, in what appears to be an attempt to punish its pro-European owner, Petro Poroshenko.
Glyazev said that the EU-Ukraine agreement contains a provision saying Ukraine pledges to allow European commodities to pass through its borders virtually without examination, such as duties or veterinary checks.
"An enormous amount of European, Turkish and other goods will appear on the Ukrainian market and then flow to us. Therefore we fear re-imports in the first place," the Russian official is quoted as saying.
According to the Russian president's advisor, if Ukraine signs the Association Agreement this will lead to a new wave of re-imports combined with the ouster of Ukrainian commodities that will not stand the competition.
"This will kill down the Ukrainian trade balance and lead to Ukraine's default on its foreign economic financial commitments," the advisor said.
Glyazev’s statement echoes a document published by Zerkalo Nedeli, a well-known Kyiv-based news website, which is making waves in Ukraine. The paper looks like a leaked Kremlin strategy to bring Ukraine back into Russia’s orbit.
The 14-page document, the authenticity of which cannot be verified, says that in spite of the EU-Ukraine trade deal being unfavourable to Ukraine, its leadership keeps pushing for it.
Unlike the EU, whose southern members have fallen into sovereign debt, Russia can make credit available to its Customs Union partners and give Ukrainian goods access to its market, the paper reads.
It mentions that the eventual membership of Ukraine to the Russian-sponsored Customs Union would bring additional trade exchange to the volume of $9 billion (€6.7 billion), while the proposed EU-Ukraine free-trade agreement would worsen Kyiv’s trade balance by $1.5 billion (€1.12 billion).
The paper indicates that Russia will deploy all efforts to prevent Ukraine from signing the EU pact, and that it will strongly back pro-Russian candidate Viktor Medvedchuk at the 2015 presidential election. ‘Ukrainian Choice’, the political party of Medvedchuk, is envisaged to play a leading role in promoting the country’s accession to the Customs Union.
Among the measures envisaged is “neutralising the media impact” of pro-European forces in Ukraine by supporting opinion makers who are favourable to Russia, as well as "sanctioning” pro-European Ukrainian oligarchs. The goal is for Ukraine to join the Customs Union in 2015, according to the document.
The paper also envisions that pro-European civil servants in Ukraine institutions, especially in the ministry of foreign affairs and the ministry of defence, “who are de facto agents for Euro-Atlantic influence”, should be “discredited” and not allowed to remain in office after the presidential election.
The paper also advises that President of Belarus Alexander Lukashenko should put pressure on his Ukrainian counterpart Viktor Yanukovych and convince him to turn to Moscow, as EU leaders "don't like him anyway".
Writing on his Facebook account, Ukrainian Prime Minister Mykola Azarov expressed the hope that there would be no trade war between his country and Russia.
"By the way, in my opinion, these wars are not in the interests of Russia as well. Therefore, we are determined to make every effort to resolve existing disputes,” Azarov wrote.
The prime minister mentions that that a Ukrainian government delegation led by Vice-Prime Minister Yuriy Boyko urgently flew at a meeting in Moscow.
"It has been agreed that representatives of the Ukrainian and Russian customs services will meet […] and will work out all the issues, which today are considered as unresolved. In short, absolutely normal work to resolve those issues [...] is conducted," Azarov said.
By blocking imports from Ukraine, Russia is waging a trade war with Ukraine, the group of the centre-right Europe Peoples’ Party in the European Parliament said in a statement.
According to MEPs Elmar Brok, Chairman of the European Parliament's foreign affairs committee and Jacek Saryusz-Wolski, EPP Group Chairman in EURONEST – the Eastern Partnership (EaP) Parliamentary Assembly and EP Rapporteur on Eastern Neighbourhood ahead of the EaP Vilnius Summit, pressure is increasing to deter Ukraine from entering into the Association Agreement and the DCFTA with the EU.
“The EU, as a concerned party in the conflict, has to act to defend Ukraine, challenged by Russia’s action, while Ukraine should do everything that is required in order to sign the Association and DCFTA Agreement with the EU,” the two MEPs state.
“The trade war waged by Russia is meant to make Ukraine choose the Eurasian Customs Union, not the EU, and send the same message to other EaP countries on the road towards their association with the European Union. It clearly violates WTO rules. However, it is not at all a trade dispute, but a very serious political conflict with a geopolitical background. It might endanger the whole Eastern Partnership project of the EU, undermine the commitment and determination of our Eastern Neighbours and it risks to provoke a domino effect,” Brok and Saryusz-Wolski further say.
The teo MEPs slam the European Commission and the European External Action Service for having been “passive” on the matter.
“Further lack of action on the Union's side will only encourage Russia to continue with pressure and blackmail, possibly mounting until the Vilnius Summit and targeting other partner countries", Brok and Saryusz-Wolski said.
Hannes Swoboda, leader of the group of Socialists and Democrats in the European Parliament, tweeted:
“Putin's policy: extreme homophobia and blackmailing Ukraine. EU needs clear policy against discrimination and for Ukraine.”
- 28-29 Nov.: Eastern Partnership Summit, to be held in Vilnius under the Lithuanian EU presidency. Ukraine hopes to sign the agreement there.