Russia’s rigid approach to Ukraine

The following is an exclusive blitz interview with Alexander SHOKHIN, President of the Russian Union of Industrialists and Entrepreneurs.

Europe is urging Russia to stop pressuring EU-membership-minded countries to change course. How would you assess Russian businesses’ losses in the latest trade war with Ukraine?

“I wouldn’t call it ‘trade war,’ although there is a degree of rigid approach on the part of the Russian Federal Customs Service, but this isn’t trade warfare. It is necessary for all the parties concerned to determine their stand in the matter of the Customs Union and European integration. You can’t run with the hare and hunt with the hounds. If Ukraine signs the FTA with the EU, it will be subject to the same terms and conditions Russia has been applying to the EU members, but there are a number of issues in regard to which the relationships between our countries could be improved. For example, the EU practices certain market quotas and Ukraine could be an exception to the rule…”

What about the losses sustained by Russian businesses? In your own words, the scope of cooperation between our countries is tangible.

“After signing FTA, Ukraine could face economic, financial, and price-setting difficulties in terms of cooperation with Russia, because shipments would have to cross frontiers several times and this would make them unreasonably expensive… On the one hand, when one is a member of a trade group and has normal relations with the WTO on the other hand, this is one’s choice. Each must assess possible profits and losses, anyway… Russia will benefit from doing business with all countries. At present, Ukraine enjoys the most favored nation status in doing business with Russia in several respects – for example, in the pipe-rolling sector. Most likely, your country will lose this status after signing FTA, considering that the terms and conditions will automatically extend not only to Ukraine.”

Do you think that Ukraine’s EU membership will be the end of its good old business contacts with Russia?

“Certainly not. The European Union is Russia’s major business partner. There are no trade obstacles, save for customs procedures meant to protect [Russia’s] market. What I mean, Ukraine won’t have the same most favored nation status Russia has with the EU countries, period.”