Ukrainian President Viktor Yanukovych on 24 August ignored a warning by Russian President Vladimir Putin and re-affirmed Kiev’s commitment to signing important agreements with the European Union, including on trade.
Two weeks ago, Moscow signalled growing alarm at Ukraine’s policy of European integration by conducting laborious extra customs checks on imports from Ukraine, causing delays at the border. Though Russia ended the customs checks after a few days, Putin said a free trade deal between Ukraine and the EU might “squeeze out” Russian goods. The Kremlin leader warned that members of the Eurasian Customs Union linking Russia, Belarus and Kazakhstan might have to take protective measures to defend their markets.
On 14 August, Ukraine’s employers’ federation, whose members account for 70% of GDP, said stricter Russian customs procedures were paralysing trade. Russia accounts for a quarter of Ukraine’s exports; the restrictions could cost up to $2.5 billion in the second half of the year, the group said.
In an Independence Day speech on 24 August, Yanukovych pointedly ignored Putin’s warning. While pledging to deepen relations with Russia and other customs union members, he indicated that Ukraine was committed to signing agreements on political association and free trade with the EU at a summit in Vilnius, Lithuania, in November. “For Ukraine, association with the European Union must become an important stimulus for forming a modern European state,” he said. “At the same time, we must preserve and continue deepening our relations [and] processes of integration with Russia, countries of the Eurasian community, other world leaders and new centres of economic development,” Yanukovych added.
However, more than 60% of Ukraine’s steel, coal, fuel, petroleum products, chemicals and grain exports go to other former Soviet republics, with Russia, Belarus and Kazakhstan the most important.
Moscow can also apply pressure on other fronts, such as gas. Ukraine is approaching winter still 3.5 billion cubic metres short of the paltry 12.5 billion cubic metres of reserves it plans to have for the start of the heating season on 1 October. In 2012 it had 20 billion cubic metres. Ukraine’s state gas company Naftogaz is facing massive debts and hurts the former Soviet republic’s state budget each month.
In previous years, Russia’s attempts to apply political pressure by cutting gas deliveries have hit Ukraine—and EU countries that import Russian gas through it.