One day before the Vilnius summit Eastern partnership summit, the European Commission today (27 November) hinted that it was “refining its thinking” about holding trilateral trade talks with Ukraine and Russia.
The confession may appease politicians in Moscow, who claim that the EU-Ukraine association agreement in its current form would cause massive harm to the Russian economy.
As leaders of the 28 EU countries prepared to leave for Vilnius to attend a summit, which until five days ago had been hailed for its geopolitical importance, Brussels and Kyiv appeared to indicate that the project of anchoring Ukraine to the European Union appeared to be falling apart.
On 21 November, Ukraine stunned the EU by announcing that it would put its EU association on hold in favour of talks to revive economic relations with Russia. At first, some thought in EU headquarters that this could be a manoeuvre by Kyiv to extract some “extras” from the signature of the EU-Ukraine association agreement (AA), coupled with a Deep and Comprehensive Free Trade Agreement (DCFTA).
But later the country’s prime minister, Mikolay Azarov, made it clear that the Ukrainian U-turn came through on the back of negotiations with Russia. Apparently, at a secretive meeting between Ukrainian President Viktor Yanukovich and his Russian counterpart, Vladimir Putin, in Moscow on 9 November, Russia asked Ukraine to freeze the EU-Ukraine deal and instead begin trilateral negotiations with Moscow and the EU.
Also, it appears that Russia has proposed easy credits to Ukraine, which struggles to avoid default. Reportedly, Moscow also signalled that it would lower gas prices for Ukraine, which are among the highest in Europe following a deal concluded under the former prime minister, Yulia Tymoshenko.
Speaking in Kyiv on Tuesday, in an interview with leading TV channels, Yanukovich said that the EU’s help in reaching an agreement with the IMF brought no results.
"Our expectation of help from the International Monetary Fund ended in nothing. I personally negotiated with the IMF at high levels in Ukraine and the United States. We received a negative answer," he said.
‘Nothing, except beautiful words’
Yanukovich also said that signature of the AA was not in the country’s interest.
“The signature of this agreement – what would it give us? Tens of billions dollars in a stabilisation fund? Some sort off advantages to Ukraine? Who will answer? So far we see nothing, except beautiful words”, Yanukovich said.
As if they were indirectly replying to him, Commission President José Manuel Barroso and Council President Herman van Rompuy published an article in the French economic daily Les Echos, claiming that AA would bring to Ukraine “the best support it needs with regard to its economic situation”.
Barroso and Van Rompuy also wrote that EU-Ukraine relations would not harm Kyiv’s relations with third countries, including Russia.
But the BBC quoted Putin as saying that a Ukraine-EU free trade deal would pose a "big threat" to Russia's economy.
Putin tells EU ‘to refrain from sharp words’
Speaking during a visit to Italy, Putin said Russia could be flooded with European goods virtually without tariffs because of an existing free-trade regime between Kiev and Moscow.
He said Russia's agriculture, car and aviation industries would suffer as a result and there could be a jump in unemployment.
"We are not ready to open our gates to European goods."
Putin urged EU officials to refrain from "sharp words" on the issue. Referring to them as "our friends in Brussels", he said: "Do we have to choke entire sectors of our economy for them to like us?"
On Monday, Barroso and van Rompuy published a statement in which they “strongly disapproved” of the Russian position and actions in respect of the Ukrainian EU association.
In his televised appearance, Yanukovich appeared to agree with Putin.
He said that Putin and he came to the conclusion at their last meeting that Ukraine, Russia, and the EU should hold tripartite consultations.
“There have been several meetings with experts as part of discussions on the situation related to problems of signing an association agreement between Ukraine and the EU," Yanukovych said in his TV appearance.
"We absolutely do not want to be a battlefield between the EU and Russia. We want to have good relations with both the EU and Russia."
He also said a separate "road-map" talks with Russia aimed at reviving economic ties would start next month.
Asked by EURACTIV to respond to the fears expressed regarding the negative consequences of the eventual entry into force of the EU-Ukraine AA, Barroso's spokesperson Pia Ahrenkilde Hansen that this agreement provided a “win-win situation for all” and that there was “no desire” on the EU part “to hamper other relationships”.
Asked if the Commission was warming up to the idea of having a trilateral format of trade discussions involving Brussels, Kyiv and Moscow, Hansen indicated that the “political thinking” in the Commission might evolve.
“Of course we are refining our thinking making adjustments in real time. The next moment to address these issues will be at the political level at the [Vilnius] summit itself with the leaders,” Barroso’s spokeperson said.
On Tuesday, another Commission spokesperson had said that the trilateral format was a no-go. Maja Kocijancic, spokesperson to EU foreign affairs chief Catherine Ashton, said that association agreements are of bilateral nature and that there was no room for involving third countries.
Ukrainian diplomats told EURACTIV that Kyiv had suggested a trilateral format on DCFTA issues “a few months ago”. At that time, Brussels made it conditional on the signing of AA, and the Russians refused.
Now the Russians are in favour, but the EU pretends it is surprised by the initiative.
“I hope we overcome this childish behaviour and move forward,” a diplomat said.
Observers generally agree that politically, Yanukovich needs to maintain the impression that his country remains on the EU track after protestors took to the streets to protest the association agreement U-turn.
The EU also needs to avoid the the Vilnius summit becoming one of its largest diplomacy failures. According to reports, Russia would not object, as long as it could continue preparing the installation behind the scenes of an even more Russia-friendly Ukrainian president in 2015.