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Nation    

Medvedev plugs Customs Union at gas talks
Journal Staff Report

KIEV, Nov. 21 - Russian Prime Minister Dmitry Medvedev on Wednesday once again asked Ukraine to join a Moscow-led trade bloc as part of negotiations over lower natural gas prices.

Prime Minister Mykola Azarov traveled to Moscow for gas talks, but Medvedev suddenly changed course, suggesting discussion of the possibility of Kiev joining the Customs Union.

"I think this issue is worth our conversation today," Medvedev told Azarov in Moscow before the talks. "If there is any possibility, I would suggest paying some attention to this difficult issue."

The joining of the Customs Union, which includes Russia, Belarus and Kazakhstan, would automatically derail Ukraine's European integration and place the country firmly into Moscow's orbit for years to come.

Ukraine has repeatedly declined joining the Customs Union and said it would rather seek to sign a political association and free trade agreement with the European Union. But Russia's persistence and willingness to use economic levers, such as natural gas prices, is overwhelming.

The developments come at a sensitive time as Ukraine is facing a financial crisis with downward pressure mounting on the national currency, the hryvnia, due to growing foreign trade deficit.

Ukraine reduced imports of Russian natural gas by 30% this year, but still was forced to pay $10 billion for gas imports in January through September, about the same amount as in the same period last year.

This, and falling exports of steel due to weakening demand worldwide, has reduced the amount of hard currency coming in the country, causing massive downward pressure on the hryvnia.

Worsening the problem is the fact that the International Monetary Fund has suspended its $15.2 billion loan to Ukraine two years ago after the government had failed to implement key economic reforms, such as hiking domestic gas prices.

Valeriy Khoroshkovskiy, first deputy prime minister, said Wednesday that joining the Customs Union would be illegal because Ukraine's legislation has set the course for the European integration.

"The joining [the Customs Union] is outside the law," Khoroshkovskiy said.

However, he said that Ukraine should be able to use some ways of cooperation with countries, such as Russia, for economic benefits especially if other markets are closed for Ukraine.

"No one has canceled economics," he said. "One has to eat every day. This means that from the economics point of view we cannot simply to shut down history, experience and approaches we have developed while working with our eastern partners."

Azarov, while talking to Medvedev, has tried to downplay Khoroshkovskiy's comments that joining the Customs Union would be illegal.

"This is his personal opinion. This is what I can say about the comments by this member of the government" Azarov told Medvedev. "Evey member of the government has the right for pluralism, for expressing his own opinion, but it does not reflect the point of view of the Ukrainian government."

Azarov's response has surprised Medvedev.

"We're intrigued, it’s not bad," Medvedev said, adding that "we have something to talk about, and even have something to drink."

Ukraine has earlier suggested increasing cooperation with Russia, Belarus and Kazakhstan without joining the Customs Union, calling such cooperation "the formula 3 plus 1." Moscow has earlier rejected the formula, insisting on the full fledged membership by Ukraine, a move that would de-facto suspend its pro-European integration. (tl/ez)




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  24.04.2024 prev
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