A warning shot

Representatives of the European Union have acknowledged that not only economy is involved in the trade dispute between Kyiv and Moscow. According to representative of the European External Action Service (EEAS) Gunnar Wiegand, “The events of recent weeks have clearly demonstrated that there is a political component in this trade dispute. The statements [of the Russian side] give us reason to think that the dispute on the border between Russia and Ukraine is the first warning shot against what may happen if Ukraine gets closer to the Association Agreement.” Wiegand made this statement at an unscheduled meeting of the Foreign Affairs Committee of the European Parliament in Brussels. He considers that “such oppression is unacceptable. Ukraine as a sovereign state has the right to make its own choices regarding its international agreements,” because, Wiegand underlined, the decision to begin negotiations on the signing of the Association Agreement was made by the Ukrainian people, no matter who was ruling the state.

It took Moscow long to respond. As expected, Russia rejected all allegations that it is forcing Ukraine to join the Customs Union and, according to its Foreign Ministry spokesman Aleksandr Lukashevich, called upon the EU to avoid assessments that distort the heart of the problem.

Meanwhile, all Kremlin’s assurances that it offers free choice and exerts no pressure on its trade partners call into question. Russian phytosanitary services came up with complaints regarding the quality of Belarusian dairy products. “Only in Moscow oblast 240 samples of Belarusian dairy products have been examined. Out of them 72 samples, or 30 percent, failed to meet the standards of quality and safety,” the head of the Russian Federal Service for Supervision of Consumer Rights Protection and Human Well-Being, chief medical executive of Russia Gennadiy Onishchenko reported. Strangely, these complaints appeared immediately after Belarusian President Alexander Lukashenko supported Ukraine in his recent statement regarding objectivity of the trade disputes with Russia.

Meanwhile Russia continues to assert that Ukrainian enterprises will suffer considerable losses in case it refuses to enter the Customs Union and starts close trade cooperation with the EU. At the same time, it prefers to keep silence concerning the losses its own enterprises may suffer. And according to foreign experts, interviewed by The Day, these losses are inevitable.

President of International Congress of Industrialists and Entrepreneurs Viktor Hlukhykh told The Day that in order to comment on any relations, you need to understand their background. “We see Vilnius as background, some see Syria, because economy is closely connected with politics,” he continued. He also noted that you need to know reasons for delays in supplies of some or other kind of goods on Ukrainian-Russian border. So far, they are unknown. “If those are violators and smugglers, they should be severely punished. If the merchandise is clean, people don’t need to be kept on the border,” he says. The Day asked, “Will both sides lose in this struggle?” “Both sides lose in any situation. It is impossible only for one side to lose,” Hlukhykh said. Therefore, in his opinion, the intergovernmental commissions on both sides must gather and resolve all these questions as soon as possible.

Hlukhykh did not mention any concrete figures in his reply to the question about the amount of losses Russian entrepreneurs will suffer, but he underlined, “Any war entails losses. Russian, Ukrainian, Belarusian, Kazakh enterprises are very much connected with each other, the cooperation is huge. Thousands of plants are involved. And any stoppage or any delay of some or other supplies is never good.”

We’ve also asked Hlukhykh’s opinion concerning the influence Ukraine’s joining the EU free trade area will have on its trade with Russia. “It will have certain influence,” he confirmed. In his opinion, Ukraine needs to read carefully through 900 pages of this agreement to understand what standpoints it supports, and what points the EU supports. “The EU guys are interesting, too. On the one hand, they say, come to us. On the other hand, don’t work with the CU, work only with us. It cannot be this way either,” he resumed. When The Day’s reporter said that the EU did not restrict the trade with the CU countries, he replied: “Of course, it has put some restrictions.” And when The Day asked a specializing question, “If Ukraine joins the EU, will it be impossible for her to trade with Russia and other CIS countries?” The expert replied: “Under current conditions, no. It will be, under European conditions.” So, the reporter resumed: “Will joining the free trade area with the EU speed up the coordination of new trade rules with Russia, so that no more trade disagreements arose?” The interlocutor gave a laconic and diplomatic reply: “It might.”

COMMENTARY

Roman DOBROKHOTOV, chairman of the democratic movement “We,” Moscow:

“Apparently, the decisions made by Vladimir Putin are political. And Ukraine’s decision to join the European customs regulations, not the Customs Union, conceived by Russia, is perceived by Putin as a turn towards the West. That is why he reacts correspondingly, with the help of such aggressive political measures, using economic leverage for this. And one can easily guess why Putin is reacting so sharply. In fact he does not understand well enough the laws, according to which the world economy is operating, although Russia has long ago entered the WTO and seemingly should have understood the value of free trade.

“If we look at Putin’s commentary on Ukraine’s aspirations to integrate deeper into the European customs regulations – he said that Ukraine would become open for the European markets, and Europe will flood Ukraine with its cheap goods and oust the Ukrainian producer – it becomes evident that he simply does not understand how the free market works and does not know the basic laws of free trade which show that in the long run free trade is always advantageous for both countries who start it.

“I think it’s his sincere belief, because he has appointed Sergey Glazyev as his advisor, a person of anti-liberal and anti-West views. And Glazyev gives comments on his behalf that now we will probably impose sanctions on Ukraine for her behavior. This is clearly a strategy based on illiberal values. As long as Vladimir Putin is in power, because of his system of values and system of coordinates, it will be impossible to speak to him the language of liberal economy, free trade and competition. He will perceive all this as a kind of a political challenge, a political choice.

“Therefore we can see that the policy of twisting arms is carried out not only against Ukraine, but Belarus, Poland, the Baltic states, Georgia as well, and practically all Russian neighbors. And the customs is a very convenient instrument here, because it is one of the most corrupted institutions in Russian state system. And it is quite inconvenient to work with it, therefore it is very easy to create additional hindrances or, vice versa, give the green light. Therefore here politics has a greater meaning than economy. And now, once again, Ukraine’s example is ample proof of this.

“Such policy is first and foremost harmful for Russian consumers, because all the imported goods in Russia are sold at a considerably higher price than in neighboring countries. And we are paying with our wallets for the borders closed by the government. Basically, nothing prevented Russia from proposing both to Ukraine and Europe to unite their economic and trade policies. There is nothing extraordinary about this, since Europe consists of states that greatly vary in terms of influence, structure of production, however, not only have they managed to create simply a joint customs union, but a joint market, too. And it would be quite simple for Russia to agree with Ukraine and Europe about the duties. But Russia does not do this namely out of political reasons. And WTO regulations should have made her do so, but Russia does not fulfill the obligations it undertakes, instead leading an aggressive and restrictive tariff policy. And it is not Putin who pays for this, but ordinary taxpayers who have to buy more expensive goods.

“Will Moscow treat Kyiv more pragmatically if Ukraine signs the Association Agreement with the EU? I think that Russia will hardly treat Ukraine pragmatically, at least as long as Putin is in power, because any economic question will be perceived in the context of politics, Western or Russian choice. Even if Ukraine starts to integrate into Europe fast enough, these questions will arise anyway. Probably the sooner Ukraine gets determined about its European choice, the sooner it integrates its legislation into the EU, the less painful its transition to new relations with Russia will be.”

Interviewed by Mykola SIRUK, The Day